Camarilla Pivot Trading Strategy — What Is It? (Backtest)

Last Updated on August 28, 2022 by Oddmund Groette

Day traders always look for ways to identify key intraday support and resistance levels. This is where the Camarilla pivot points come in. But what is the Camarilla pivot point trading strategy?

Introduced in 1989 by Nick Scott, a successful bond trader, the Camarilla pivot point is an extension of the classical/floor trader pivot point which provides day traders with key intraday support and resistance levels. It has four support and four resistance levels. The Camarilla pivot trading strategy is used for day trading and the way to trade it depends on the market conditions at a given time.

Let’s take a look at the Camarilla pivot points

What is the Camarilla pivot trading strategy?

The Camarilla pivot point is an extension of the classical/floor trader pivot point which provides day traders with key intraday support and resistance levels. It was introduced in 1989 by Nick Scott, a successful bond trader. The Camarilla pivot point indicator shows four support and four resistance levels, making it a total of nine levels.

It is a versatile indicator that allows traders to recognize key price levels, entry points, exit points, and appropriate risk management. The Camarilla pivot trading strategy is used for day trading and the way to trade it depends on the market conditions at a given time.

There are various Camarilla pivot point strategies to trade any financial market, and these are a few ideas you can test out for day trading:

  • The market opens above yesterday’s close and drops to the first pivot point support — you go long at the first support pivot point and exit at the day’s close.
  • The market opens below yesterday’s close, but above the first pivot point support, and drops to the first pivot point support — enter at the first support pivot point and exit at the day’s close.
  • The market opens below yesterday’s close and rises to the first PP resistance — go short at the first resistance pivot point and exit at the day’s close.
  • The market opens above yesterday’s close, but below the first pivot point resistance, and rises to the first pivot point resistance — enter at the first resistance pivot point and exit at the day’s close.
  • The market opens below the first support pivot point, which now becomes resistance — go short at that first support pivot point and exit at the day’s close.

Do traders use pivot points?

Yes, day traders, use pivot points to define important support and resistance levels or to identify potential changes in trend direction. There are five different types of pivot points that are commonly used by day traders to identify key intraday price levels. They are as follows:

  1. Classical pivot points
  2. Camarilla pivot points
  3. Fibonacci pivot points
  4. Woodies pivote points
  5. DeMark pivot points

Camarilla pivot vs. fibonacci pivot

The Camarilla pivot uses closing prices from the previous day to compute key support/resistance levels, and it has a total of nine price levels, including four resistance levels and four support levels.

The Fibonacci pivot points strategy, on the other hand, involves the use of Fibonacci studies — projections, extensions, and retracements from price swings — to determine key price levels. The most commonly used levels include the 38.2%, 50%, 61.8%, and 100% retracement levels, as well as the 127%, 138%, and 161.8% extension levels.

Camarilla pivot trading strategy (backtest and example)

A backtest of a camarilla pivot trading strategy is coming soon.

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