DeMark Pivot Trade

Entry Logic

Enter long when price closes above a DeMark Resistance 1 (R1) after a pullback. Confirm with a strong bullish candle on the 5-minute chart. Price must be above the 20-period EMA. Market must be trending up.

Exit Logic

Target DeMark R2 or R3. Scale out 50% at R2. Trail stop using the 10-period EMA on a 5-minute chart. Exit the entire position if a bearish engulfing pattern forms. Close positions 30 minutes before market close.

Stop Loss Structure

Place hard stop 10 ticks below the entry candle's low. Max dollar loss is $120. Max percent loss is 0.6% of account. Structural stop is below the recent swing low.

Risk Management Framework

Risk 0.75% of account per trade. Daily loss limit is 2.5% of account. Weekly loss limit is 5% of account. Max drawdown is 8%. Require a minimum 1.75:1 R:R.

Position Sizing Model

Size based on volatility-adjusted risk. Reduce size by 15% for instruments with ATR > 2% of price. Increase size by 10% for high conviction trades. Scale in 60% on initial entry, 40% on breakout confirmation.

Trade Filtering

Focus on S&P 500 components. Volume must be above 2 million shares. Avoid trading during the first 15 minutes of the market open. Avoid thinly traded instruments.

Context Framework

Trade in the direction of the 15-minute trend. Price must be above the 50-period SMA on the 15-minute chart. Price should be trading above the daily VWAP. Look for higher timeframe (30-minute) confirmation of momentum.

Trade Management Rules

Move stop to breakeven when price moves 1R in profit. Scale out 30% at 1R, 30% at 2R. Do not add to losing positions. Adjust stop loss aggressively on fast moves.

Time Rules

Optimal trading window is 10:00 AM to 12:00 PM EST. Avoid trading during the lunch hour (12:00 PM - 1:00 PM EST). Avoid trading in the last hour of the session.

Setup Classification

A+: Price breaks R1 with high volume. Strong confirmation candle. Clear trend. A: Price breaks R1 with good volume. Decent confirmation. Established trend. B: Price attempts to break R1 with average volume. Weaker confirmation. Emerging trend. C: Weak R1 break, low volume, no clear trend. Avoid.

Market Selection Criteria

Focus on large-cap stocks. Average daily volume must exceed 3 million shares. ATR must be at least 1.5% of the instrument's price.

Statistical Edge Metrics

Target 58% win rate. Average win $180. Average loss $120. Profit factor 1.87. Expectancy $46.8 per trade.

Failure Conditions

Price fails to sustain the breakout above R1. Volume is low on the breakout. Market loses momentum. Trend reversal on higher timeframes.

Psychological Rules

Accept small losses. Trust your analysis. Do not overtrade. Focus on execution.

Advanced Components

Use MACD crossover for additional momentum confirmation. Filter for instruments with strong industry group performance. Check for 4-hour chart trend alignment.

Location

Strongest when R1 breakout occurs in a strong uptrend. Weakest when R1 is close to a major resistance zone from a higher timeframe.