My Camarilla Trading Strategy
I want to show you one of my trading strategies. The strategy is divided in
Part 1 - The Camarilla Equation
Part 2 - Trendlines
Part 3 - Fibonacci
Part 4 – The strategy where Part 1-3 is combined
Part 1 of 4
What is Camarilla Equation
Camarilla is nearly the same like
pivot with support and resistance. You have different levels in a day where you
can place orders. This technique was found in 1989 and was successfully used in
the financial market.
There are different levels of support
and resistance, which are calculated on the high and low of the day before.
This means, that today’s support and resistance levels can be predicted a
The Camarilla Equation is often used
by bank traders for predicting the direction. The trades are with and against
the trend either way. It is using simple rules based around price activity oft
he L3, L4 level (attention JForex Plattform has different names for that
In JForex Plattform the levels are
called S3 (Support) and R3 (Resistance) S4 and R4 doesn’t exist, so you have to
calculate it manually or like I do, I’m using a Camarilla Calculator for it.
At my beginning of this strategy I
drawed and calculated this levels by hand, for my own practice.
Research suggests that the positive
results of that trading style is 4 of 5.
Now the Camarilla Trade Setup
For your first trade, you must know,
where the price comes from.
Is the opening price between L3 and
H3 means, if H3 is hit, you go short and take H4 as your stoploss point,
because the H4 and L4 Levels are also called breakout levels. If the day opens
between L3 and H3 and touches L3, you go long and take L4 as your stoploss.
Look at the picture below, so you can
see what I want to say.
Opening price is between L3 and H3
and this means, that your first trade is against the trend.
Another possibility is, that the day
opens above H3 or below L3. So you have to trade with the trend. In the
pricture below you see Level H4 and H3. The opening price is nearly at H4 and
is going down. H3 is hit and this means that you trade short with the trend. H4
is again your stoploss for your safety.
In case oft he price comes from
below, you trade long at L3 and set L4 as your stoploss.
Opening price is above H3 and this
means, that your first trade is with the trend.
What to do if L4 or H4 is hit?
In this case you may go long, if H4
is broken and you go short, if L4 is broken. This are the Breakout Levels and
very often the chart is heavy moving at these points of Camarilla and you could
earn some pips. Your stoploss is H3 or L3.
And how are the points calculated?
This is the magic key
H4 = [1.1*(H-L)/2]+C
H3 = [1.1*(H-L)/4]+C
H2 = [1.1*(H-L)/6]+C
H1 = [1.1*(H-L)/12]+C
L1 = C-[1.1*(H-L)/12]
L2 = C-[1.1*(H-L)/6]
L3 = C-[1.1*(H-L)/4]
L4 = C-[1.1*(H-L)/2]
The H stands for the High of the
The L is standing for the Low of the
And C is standing for the closing
price of the previous day
As I said, the JForex Camarilla
Indicator has other letters.
H=R and L=S and it don’t draw the S4 and R4
Levels, so you have to draw it manually on the chart.
Also the Camarilla Indicator draws
the Pivot Point at your chart, which is a good support or resistance level and
is helping and assisting you.
Here you have a calculator for those points http://pivottrading.net/pivot/pivot/advancedCamarillaPivot.php
So look again next week for my 2nd part of my trading strategy. I hope you enjoyed this Part of my Strategy and
let me know, what you think about it. Thank you for reading!