Pivot Points

Discussion in 'Technical Analysis' started by JonathanMtl, Oct 6, 2008.

  1. I'm a new YM, ES trader. What do you guys think about the pivot points strategy? It seam to me like a good way to earn some money. Now I need to work on the execution...

    Are you using this strategy?
  2. Jonathan,

    I think that pivot points are a great tool to use along with many others. Finding a point to enter a trade is similar to solving a mystery crime. Lots of little pieces of evidence will add up to eventually point to a single conclusion. I use pivot points everyday, along with some other basic resistance lines and trend lines to improve the probability of directional choices.

    Its also important to be experienced at all the little games the prices will play around the pivot lines as the underlying marching on towards its eventual conclusion.

    Good luck!
  3. Lucrum


    I have played around with pivot levels in the past. Not knocking anyone's choice to use them but they always seemed rather arbitrary to me. IOW they are defined primarily by the equations , of which there are several varieties, and not really defined by the market itself.
  4. I have mixed emotions about pivot points.

    I can't find any legitimate reason why they would matter at all, yet I can't help but see price attract to them and the action getting real choppy around them.

    So, IDK. I kinda wish they didn't exist.

    For example, If I see a setup I'll hesitate to enter if price is close to a PP out of fear that price will zing right to it.
  5. RedEye and Lucrum have it right. Pivot points work.....sometimes. Like everything you might try. It works....sometimes. If you're new then realize that there is no Holy Grail...nothing that works ALL the time. My advice would be to study a 5m chart with pivot points, previous day's high/low/close, current day's open, and a 20 ema. These are the things that most traders use IMO. Watch how price reacts when it tests these levels. Soon you'll see repeating patterns that will give you good entry signals. But as I said before, even these signals don't work all the time. hth
  6. Lucrum


    Oh and I just remembered. I read somewhere a floor trader stated that the retail traders use of pivots is completely different from the original intended use.
    I believe he said the pivots were merely intended as stop loss levels not "S/R" levels.
  7. Try that with any random line on the chart, if you watch it long enough it will seem to have meaning.
    I just trade off the session high/low and overnight high/low...I don't see the point in adding arbitrary math into the mix.
  8. Might I suggest using Opening Range Pivots.
    Use the OHLC of the first 60 minutes of market action to factor your pivots,and watch them closely.
    Taking pivot fades in the direction of the trend, or as best you can see it, works very well.
    Wait till mkt price shoots thru S1/R1 or the main Pivot Point, then let it retrace back to it and set your limit orders.
    Suri Duddella has a few pages dedicated to Opening Range Pivots in his book Trade Chart Patterns like the Pros.
    Very useful, at least to me.
    PM me if you'd like more information on trading these.