Pivot Point

Discussion in 'Technical Analysis' started by ylc221, May 12, 2010.

  1. ylc221


    Does pivot point work?
    From some books I read and some website, ppl say that pivot point is the most important tech analysis tool in day trading. Is it true?
  2. Usually there's a specific entry/exit signal been discussed by those that use pivot points in those books you've read or at the website. Therefore, the issue is not if pivot points work...it's if whatever entry/exit signal works well (profitable) with pivot points.

    Thus, there are two variables and one without the other is not a valid trade for those using pivot points:

    * Pivot Point

    * Exit/Entry Signal

    Also, it doesn't matter if it's the "most important" technical analysis tool.

  3. ylc221


    So among all these tech analysis methods, moving average, MACD, ocillator, pivots.... And so on. Which does a day trader use? I read a book and the author days that whe he started trading, he used all the lagging indicator which beginner usually tend to use, and he blew his account. He thus learn from the failure and started to use pivots. I'm just confused about it cause I thought moving average crossover works well and ocillators identifies those exhaustions. I'm planning to be a day trader, can any experienced day trader give me some advice?
  4. There are hundreds of types of TA methods involving chart analysis, price action (e.g. s/r, trendlines, pivots, bid/ask analysis), indicators (e.g. macd or moving averages) or any combination.

    With that said, every trader has his/her own personality. Therefore, your question about what type of TA should a trader use is like asking what type of food should someone eat and how to cook it while not mentioning anything about your existing eating habits, dietary needs and so on. However, the first thing you need to learn is that most profitable traders that use technical analysis...it's not the only thing they use. Simply, technical analysis is just one chapter in someone's book and arguably not the most important chapter.

    Here's my list of chapters that's arguably more important than the chapter called technical analysis:

    * Discipline, money management, market experience (with and without trading), position size management, proper capitalized, proper computer equipment, proper trader workstation, proper trading environment at home/work et cetera. All of these variables working together is your trading plan or team while TA is just one of the players on the team sort'uv speak.

    My point is that most new traders make the classic mistake of concentrating on TA in the beginning as if it's chapter 1 when in fact it should be the last or one of the last chapters towards the end of the book. Most ignore the order of importance and I strongly believe it's why most traders do fail regardless is their methods involve TA or something else. In addition, the high failure rate is encourage by those that don't want to mention or minimize the importance of those other variables I mentioned above because TA is a lot more seductive topic than those other variables.

    If you don't believe me...just spend a few months here at EliteTrader.com or any other trader forum and you'll easily see that the longest threads (+100 pages), arguments, most popular threads, highest rating threads are the TA or Strategy discussion threads while threads on topics like money management, discipline et cetera are only a few pages in comparison.

    In addition, just because a particular type of TA works or doesn't work for someone else doesn't imply it will work or not work for you. The only way you can determine what works for you is to select something that looks interesting and then apply it via a simulator trading account. However, don't do any real money trading until you have a strong understanding and in place all those other variables I mentioned above that's part of your trading plan or team. Ensuring your team is working together will increase dramatically you'll be a profitable trader with or without technical analysis.

  5. ylc221


    First, I'd like to thank you.

    I do agree TA isn't the most important part since trading is about managing but not predicting (correct me if i was wrong). Money management is probably the most critical part in the whole trading session? Assuming I'm very disciplined and calmed.

    Also, what's bid/ask analysis? i've never heard of it, but it sounds pretty important. Is it some kind of psychological analysis of the market bulls and bears?

    I've read a book "trading for a living" by Alexander Elder. Is it a good book? When I read it, everything makes sense to me. I just wanna know if it's really the book is good, or is it I'm beginner so any new knowledge makes sense to me.
  6. You will learn that every trading day is different and that one particular variable in your trading plan will have more impact on your profit level than the other variables on that trading day. Thus, today it may be the money management variable and tomorrow it may be more about discipline and the day after that it may be trade management...something different each trading day that has the most impact on your profit level.

    Open up your data vendor chart program and bring up a time & sales window. You'll see bid/ask/trades and times such occurred that's moving (streaming) in that live window. Some traders use that only and nothing else while others use it with chart analysis or in combo with other types of TA.

    Like I said, technical analysis of price is a big arena. However, the fact that you ask me what is bid/ask tells me you don't even have streaming live data.

    I don't know but Elitetrader.com and Amazon have customer reviews. Regardless, after you start trading (simulator) and if it's helpful...you can say it's a good book for you even if someone saids the book didn't help them.



  7. pwrtrdr


    I agree, so good to hear it. So much BS on this site, so much.

    All that you point out is hard to do, but its so true it HAS to be done to make a success

  8. Yes

    For Long Term Contrarian. DCA(ing) Down and reset(ing) or reloading on the way up. Wave trading for the LongerTerm holders.

    Example: Stock%/Cash etc...

    R2:10% Owned/90% Cash
    R1: 30% Owned/
    Pivot 50%/
    S1: 70%/
    S2: 90%/
    S3: 100%/

    Can be recalculated BiAnnually, Quarterly, and or Monthly.
  9. LEAPup


    Great posts Mark!

    For the OP, you may have heard the saying, "how do you eat an elephant?

    A: one bite at a time."

    Research what Mark told you first imo on money management, position size, etc.,

    If you're wanting to learn t/a pivot points, google a "falling wedge" and see what you come up with. I'm still learning t/a from a good mentor, so I am not the guy with all the answers. (nor is anyone else.) Read, read, and read some more.
  10. ylc221


    But isn't falling wedge chart pattern reading?
    #10     May 13, 2010