Enter your trade when the high (or low) of the first price bar that fails to make a new low (or high) is broken. The following list shows the steps required for both long and short entries :
Long Trade
- Price bar touches the pivot point
- Subsequent price bar fails to make a new low
- Subsequent price bar breaks the high of the previous price bar
Short Trade
- Price bar touches the pivot point
- Subsequent price bar fails to make a new high
- Subsequent price bar breaks the low of the previous price bar
In the trade shown on the chart below, the bar that failed to make a new high is shown in white. The entry is when the subsequent price bar breaks the low of the entry bar, which is at 7217.0, with a target of 7207.0, and a default stop loss of 7222.0. The stop loss can be adjusted to use either the pivot point as the stop loss, or the high (or low) of the entry bar as the stop loss, depending upon the market being traded.
There is no default order type for the pivot point bounce trade entry, but for the DAX the recommendation is a limit order.
As soon as your entry order has been filled, make sure that your trading software has placed your target and stop loss orders, or place them manually if necessary. There is no default order type for either the target or stop loss, but for the DAX (and usually for all markets), the recommendation is a limit order for the target, and a stop order for the stop loss.
