Pivot Breakout Trading Part II: Exit Strategies

0ShareHedgeFundLIVE.com — I posted a blog recently regarding trading on pivot point breakouts, namely, exit strategies for these breakout trades.  Trading is all about timing.  And as you may have heard many times before, getting in is the easy part.  So when is it time to exit your trades?  I will address one particular exit strategy using pivot point trading.  Camarilla pivots are closely watched on the Hedge Fund LIVE desks.  A study that I am starting (on Zach’s suggestion) is to look at how far above R4 or below S4 that stocks tend to move once they have made a breakout signal.  (If you are unfamiliar with pivot trading, you can check out our tutorial on Pivot Point Trading 101 in our eLearn section.)

As part of this study, I am taking a look at the major sectors through the SPDR ETFs and selecting the top five most heavily weighted names in each.  Then for each individual stock I am going back historically (roughly 25-30 years) and calculating an average of the degree of moves above R4 and below S4 when the name has generated the breakout pivot signal.  The sectors that I am specifically examining are Energy (XLE), Technology (XLK), Financials (XLF), Industrials (XLI), Materials (XLB), and Consumer Discretionary (XLY).  The figure below summarizes the average percentage above R4 and below S4:

Pivot Breakout Trading R4 Breakouts S4 Breakdowns



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