Fibopivot Channel Strategy Trading System For MT4

Fibopivot Channel Strategy  Trading System For MT4

Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.

 

The Fibopivot Channel Strategy Trading System For MT4 is another way of trading pivot points. It is a system that does not subscribe to the typical way pivot points are traded as it incorporates the Moving Average Convergence Divergence (MACD) indicator to confirm trade entries.

This trading method's mechanics is straightforward, and the strategy rules and examples discussed in this article are even suited for beginners to follow.


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Defining Pivot Points

Pivot Points are price levels derived from calculating the previous session's price metrics, including the close, high, and low. Once these metrics are calculated, they are plotted as horizontal lines on the current session. And what they represent are key support and resistance areas where a trader can base trades on.

There is a total of seven of these price levels, but it can extend up to eleven, depending on how far the price has traversed. And these levels are labeled as R1, R2, R3, PP, S1, S2, and S3.


Common Pivot Point Strategy

A standard way to trade pivot points is to treat them like regular support and resistance levels. Traders can speculate either a bounce or a break at those levels and place trades accordingly. The main target is the next pivot level, and the stop-loss level is, depending on the trade, either the level below or above it.

For example, a clear bounce off S1 could warrant a buy trade, with S2 as the initial target. Conversely, a rejection of the price from further bursting past R1 could elicit a short position, and R3 serves as the first target.

Traders can also anticipate a failure to close at those levels for an earlier entry. For instance, an attempt of the price to close beyond R1 but only to fall short and close below it can be taken as a signal for a sell trade. The opposite applies to a buy setup.

 

Fibopivot Channel Strategy Trading System For MT4 - Combining Indicators

However, a trade solely rooted in pivot points may be inadequate, so to improve the probability of success are other technical tools. Oscillators can do an excellent job of determining the price's extreme value at a point in time. This can substantiate a potential entry if its current reading supports the price action on the pivot levels.

In this system, the MACD will fulfill the role of that oscillator to accompany pivot points. The MACD is a useful indicator for recognizing bullish and bearish momentum in the market. Apart from that, it can also offer entry and exit points. And it blends into this strategy as a way to determine whether a trade will be taken or not.

 

Setting Up and Guidelines

Now, for the Fibopivot Channel Strategy to function effectively, a few things should be kept in check, notably the timeframe. The strategy works best on the 4H timeframe as it leaves ample time for a trade to move within the pivot points of the previous day.

It is also applicable to the main currency pairs, as well as metals and oil. And the required indicators are the following:

 

    • Fibo channel 3
    • Real MACD (5,15,1)

 

But since the Fibopivot Channel Strategy is also an MT4 template, the file must first be copied to the template folder of the MT4 application. All the other indicator files should be pasted into the indicator folder.


Trade Setups - Fibopivot Channel Strategy Trading System For MT4

So, as previously touched on, the two technical tools will work in tandem with the pivot points acting as support and resistance levels and the MACD confirming a trade entry. However, what is unique about this strategy is that not all the levels will merit a trade.

Instead of taking a trade based on a break or a bounce off any pivot point, the only level that would be paid close attention to is the main pivot point or PP.

A close above or below the PP is the primary signal, and the MACD should back this up with a histogram bar color that coincides with the direction of the close.


For example, a close above the PP indicates a buy trade is in the works, but for it to offer a valid setup, the previous session's histogram bar's color must be green. The entry, in this case, is the candle after the initial close.

 

Buy Trade Example for the Fibopivot Channel Strategy Trading System For MT4

 Here is an example of a long position with this strategy:


In the screenshot above, there was one invalid entry and two valid ones. The trade entries that adhered to the system rules have a checkmark underneath the candlestick, and the upside-down arrow marks the next candle where the entry should be.

The two entries were correct because the close they have above PP level was supported by a green histogram bar in the previous four-hour period. The other levels are only utilized as targets and stop-loss. R1 served as the primary target, and the stop-loss was placed at S1.

 

Sell Trade Example for the Fibopivot Channel Strategy Trading System For MT4

Here is an example of a short position with this strategy:


Once again, the checkmark shows a valid entry, and in this case, there was only one. The two other breaks below PP was not buffered by a red histogram bar in the previous four-hour session. And, like the buy trade, the arrow indicates the entry after the initial break. For this trade, the initial target was set at S1, and the stop-loss was at R1.

 

Maximizing Profits

The two examples above show both trades went past their initial profit target, which means that closing at the first support or resistance level offered by the pivot points would be premature and would also mean missing out on larger gains.

There are two ways to maximize profits in this system: trailing stops or a "reverse close."

The best way to position trailing stops is at least a few pips below or above the PP level and will be readjusted to track it. But this would depend on the pair traded or if there is a strong prevailing trend that distances the price from the PP level considerably. If there is no presence of a robust trend, then the S1 level could be an alternative trailing stop level.

The other way is the "reverse close," which only means to wait for a new close below or above the PP level. For example, if it is a buy trade, the close would have to be below the PP level to encourage trade termination.

 

We suggest to trade a new trading system on a demo account for at least a few weeks. This will help you to learn the system without risk of losing money. Later you can switch to a real money account. 

Download the complete system description and the files here:

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