Trend Pivot Entries with Losing-Position Scale-Ins

Summary

This strategy seeks pullbacks within a strong trend. It defines direction with a long-period exponential moving average and directional indicators, requiring the average directional index to exceed a threshold. A confirmed pivot low can trigger a long entry in an uptrend, while a pivot high can trigger a short in a downtrend. Additional entries are allowed only when price is adverse to the current average entry price, so the method adds to losing positions rather than winners.

Position sizes follow an increasing cash sequence across as many as five entries. The entire basket exits at an ATR-based target measured from its average price; the target distance contracts as the number of open trades grows. This describes a specific averaging-down approach with trend and pivot filters, not a fixed stop-loss framework. The author mentions testing but supplies no backtest figures, and the document cautions readers to evaluate the method independently. Exposure can rise substantially during continued adverse movement, making sizing and risk limits important considerations.

Key ideas

• Trend direction requires price relative to a long EMA, directional-indicator alignment, and ADX above a threshold.
• Pivot lows and highs provide potential long and short entries in the corresponding trend.
• Further entries are permitted only when price has moved against the existing position’s average entry.
• Cash allocations increase across up to five entries, raising exposure as the position moves further underwater.
• The basket target is based on ATR and tightens as more trades are open, while no explicit stop loss is shown.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.