If I could only trade 1 strategy, this is IT

Discussion in 'Strategy Development' started by iamanuttyhead, Aug 22, 2006.

  1. My preferred way of applying support and resistance techniques to day trading the e-minis is through the use of daily pivot points. I apply common techniques around the pivot points, such as buying bounces off of support in an upward trend or buying breakouts above resistance. In downward trends, I look to short on breaks below support or upon rollovers from resistance. It's that simple.

    :)
     
  2. I have notified the Nobel Prize committee and they are ready to act immediately..

    Congrats Mr. Alias, as I understand it they intend to present you with this year's prize for wasting our time.....

    A profound accomplishment indeed....


    :D
     
  3. Pabst

    Pabst

    Just to recap: Today's pivots in ES were R2 1306.42
    R1 1304.33
    PP 1301.42
    S1 1299.33
    S2 1296.42

    There was a PP generated level every other point. NOT ONE OF THEM WAS MEANINGFUL!


    Conversely Tom DeMark's formula produced but three PP's R1 1302.88, PP 1300.69 , S1 1297.88. Each was vaguely ok. I've examined pivots in Treasuries for twenty years and in Index futures for a handful. I see ZERO added value amidst much randomness.
     
  4. lwlee

    lwlee

    Just as nothing is absolute in trading, PP are not guaranteed to always work but the simple fact that every one watches makes them self-fulfilling.

    I am much more inclined to fade for quick ticks around pivot points than any other price point.

    I only use the classics, none of those derivations. The more people that watch and believe, the more resistance exists.

    If I haven't made my point, YES, they go work.

     
  5. Okay, I have heard this a couple times and it bears talkiing about

    First of all, in my opinion Pivots are (among other things) a mechanism that provide psychological comfort to the trader. They accomplish that by providing a context, a framework within which to operate.
    Second, Pivots are used by a lot of traders on and off the floor. I used to signal levels into the pits, so I know that they WERE in use and I would bet things haven't changed greatly. This means that a lot of folks are looking at the same (or similar) numbers during the day
    Third, I don't use them like "on & off" switches. I would never suggest specific buys or sells, but instead I watch how price acts "around" pivot levels. In other words, I wait to see if price will respect a pivot or not.
    Fourth, I have my own adaptation on the concept that works very well WITH pivots. Even so, I still wait to see how price acts in the vicinity of a pivot, and I base my decision on more than just that data. I am pretty sure you do too.

    NOW, I can talk more about some of those concepts, and some I am not willing to talk about much cause it cost me a lot of time to discover how they work. If you want to develop some of this, let me know....

    Steve
     
  6. Hey Steve -

    Glad to see your experiential confirmation (to a degree) on pivots. I'd like to hear a bit more about how you use them.

    Personally, I look for divergences around pivots to give confirmation of their ability to reverse or stop the trend, i.e. the combination is stronger than either on its own.

    Sandy
     
  7. Pabst -

    You might try calculating the the pivot numbers using the Globex HLC, rather than the RTH HLC.

    With that method, the S1 level for today was 98.25. When it first hit this level, price immediately bounced 2 points up.

    The subsequent low of day was 97.25. There was a nice divergence there (from the previous low at 1298.0) that reversed the down trend and caused price to revert back up to the Pivot at 1302.5, where it held +/- for the last hour of the day.

    Contrary to your assertion of pure randomness, the pivot levels worked terrifically well this afternoon.

    Does it always work this well, no. But to say that pivot levels have no relevance is not accurate. Just make sure you're calculating them correctly. :)

    Sandy
     

  8. Main reason I only track market profile levels --- they worked great again today.


    I took a LONG off one of the MP levels today as the market delta shifted...............

    http://www.charthub.com/images/2006/08/22/ESDeltaTrend345_3.png
     
  9. Okay,

    First, I don't know if there is a correlation between divergence and the location of pivots. If there were a way to demonstrate that, it would be quite valuable to the trader who knew about it.

    Secondly, I refer to previous day's intraday charts to see if price has respected pivots recently...

    Third, I use candles and I watch for specific technical formations. When I see them confirmed (tested) then I act. One simple example is seen at swing highs and lows, and occurs when you see a long tail just prior to a reversal. Another example occurs when you see price hesitate at a swing high or low just after a tick high (1000 or better on a tick chart). A very good reference for those who want more information on this topic is a book titled "A complete guide to Technical Trading Tactics" by John Person, published by Wiley.

    Finally, I look for confirmations among two indexes (I trade only index futures). So for instance, I may watch the S&P and another index, perhaps the Russell, Naz, or Dow. At this point I have to point out a limitation to my willingness to discuss concepts. I know that at certain times of the year, specific indexes lead and others follow. I have to leave it to you folks at this point to do your own research.....I will say that it is valuable to know who leads and who follows (and why)....

    Good luck
    Steve
     
  10. Yes that NQ sure carried the flag good last week....... ;-)


    btw, if I see a market delta shift right at a market profile level then I am much more likely to trade my "full package" size there. The more optimal my trade set-up is the more size I will trade, and playing off market profile levels statistically gives me the best intended response.
     
    #10     Aug 23, 2006