I'm sure some people use pivot points to orient their trades during the day. I was wondering what those different ways are. In my trading, which involves 1-3 trades per day, I use them to determine both direction and sometimes to base trades off of. I pretty much take yesterdays' H+L+C and divide by 3. But, I solidify the line after the following days price action creates a s/r point near my estimated line. Today was a good example in the S&P emini. The 4th 30-minute bar formed a low at 847.50, and again retested 847.50 an hour and a half later from beneath. This was lower than my estimate, but I go with popular opinion. I went short @ 847.50 around 11:29, after anticipating a slightly higher pivot point. I usually put in a hefty stop loss, in this case the HOD. Luckily today sold off well, but most days obviously aren't this good. The previous 7 seven days stayed nicely above/ below the pivot points, and allowed longer-term positions to be held without any reversals worries. If a day constantly channels and crosses the previous days pivot multiple times, I stop trading for that day. This is just one element of my trading, and I break the rules sometimes for gaps, etc., but to me, these reference points are very important for success in longer term trading. Anybody have other uses for these pivot points?
I regard pivots as a basic foundation of trading the futures. I use them pretty much the same way you seem to. Long only if above, short only if below, look for reversals at the line and breakouts if it smashes through. Occasionally, I disregard them but it's hard to go far wrong if you're in synch with them.
when you combine pivots with active trend (visible with the daily time frame) it's even harder to go wrong.
I calculated yesterday's pivot point for the ES at 835.50. We popped above it the first hour but it immediately retreated and couldn't breach it again. Things look pretty bearish. The late afternoon rally attempt gave it a good try from the lows, but was met with constant selling. Must be some big surprise news event coming up??
I've always thought of a pivot high as a bar with at least two lower highs to each side, reverse for a pivot low. Am I missing something? Is there a more accurate way to define a pivot point with a formula? Thanks!
I would call those swing highs and lows but the term pivot gets thrown around to describe a lot of different things. What they are talking about here is the pivot price concept originally used by floor traders in chicago. Pivot price= H+L+C/3, R1=2*P-L, S1=2*P-H
I have my own way of calculating S/R beyond the swing point, so I don't use those figures. I just like to know where the line is for certain trades, and if I'm going against the grain I use smaller profit targets