Camarilla Equation

[Aviator33]

Hi All

Just wondering if anyone out there has any experience with the Camarilla Equation for trading support/resistance/pivot levels? I've already been through the 2000+ pages of info on Google but wanted to get an Aussie perspective on it if possible.

Cheers
AV

 

[Timmy]

Is that an equation for calculating tomorrow's pivots (S3, S2, S1, PP, R1, R2, R3) from today's OHLC? Isn't it slightly different from the 'traditional' pivot point calculation?

 

[Aviator33]

Yeah Timmy, it is calculated differently from the traditional pivots and traded a bit differently too. Have run a really quick test this morning and it seems to have some merit for intraday trading though I'd like to run an exhaustive test before I decalre it the holy grail LOL

Cheers
AV

 

[Timmy]

I don't know if I can offer anything more than what you have probably found on Google already and maybe in your own testing, but this is my experience on 'pivots'. (I define a pivot as any price derived/calculated from commonly referenced formulae like the various pivot point calculations, market profile, Fibonacci, yesterday's OHLC, today's OHL, obvious past support and resistance, etc.).

Over-riding 'rule' is to use them as prices at which you will pay extra attention to how the market is behaving - what is the price doing, what is the volume doing, what is the pace of the price movement, what is the pace of the volume movement, is support forming, is resistance forming. is supply overcoming demand, is demand overcoming supply...and so on? (Actually being in tune with these sorts of questions throughout the trading day (you are day-trading right?) will be beneficial, whether or not price is at a pivot). So, avoid a trading rule like "the price is now at the pivot therefore I will sell/buy" (although there are methods and times where this may return some expectation of a profit, even if just a quick retracement-style trade).

I view pivots as self-referential prices in the market, that is the price may stall/turn there because traders are expecting it to and therefore behaving in a manner leading to that outcome, again at least in the very short-term (day-trading time frames). Sometimes pivots will be more than self-referential, i.e. there may well be resting sell/buy orders at a price from longer term traders/investors - but again following the rule to pay attention to price/volume behaviour will reveal this information to you, or at least be strongly suggestive of this information. The more popular the method of pivot calculation is in the instrument/market you are trading, the more likely the particular pivot is to be relevant in the path of price movement. Thus, if the traders in the instrument/market you are trading are focusing on Camarilla levels, the more likely these levels are to have relevance - again at least in the short time-frame.

Try to have some framework for assessing whether the price is in a trending mode or a range-bound mode. This will effect how you trade at pivots, whether to fade a move, or stand aside, or go with it. This framework may be something like using market profile concepts or assessing price and volume behaviour in relation to one another and themselves.

And of course (you know this) stop losses, risk management, etc. etc.

I know little of this is specific to Camarilla calculations, which was your original question, but hope it helps.

 

[Aviator33]

I know little of this is specific to Camarilla calculations, which was your original question, but hope it helps.

Maybe not directly related to Camarilla but some brilliant observations there. Really appreciate the feedback Timmy, thanks heaps. (And yes, I am daytrading at the moment.)

Totally agree that these and other pivot points are more of a "heightened awarness zone" and really need confirmation from volume, overbought/sold indicators etc.

One thing you said really nails it and I guess it's something I hadn't really thought about. I find a lot of the times it depends on what indicators the majority of traders appear to be using. For instance if everyone is running off a classic 10/20 MA or 15/3 stochastic, everyone is expecting x or y to happen around those levels and so you tend to get a self fulfilling indicator as everyone reacts at the hot points (does that make sense?). So having said that, Camarilla doesn't seem to fit in as a mainstream popular indicator so may not have the level of support to react as expected.

Still, initial rough testing does show some credibility to it so I guess I'll have to run it live next week with a bucketload of caution and see how she goes.

Thanks again Timmy.

Cheers
AV

 

[RazzaDazzla]

Aviator33, How'd you go with using the Camarilla equation?

 

[tech/a]

Sounds Frank Dilernia style to me.

 

[RazzaDazzla]

Tech/a,

That a good thing, bad thing?

 

[tech/a]

Its an observation