Pivot Ranges: Useful Tool or Snake Oil?

Discussion in 'Technical Analysis' started by bluedemon77, Aug 10, 2006.

  1. bluedemon77

    bluedemon77 Guest

    I set up my charting software to plot daily pivot ranges (ala Mark Fisher) on my intraday charts. So far I'm not really impressed by them because they don't seem to predict the future better than just eyeballing the trend. I mean the prices drop down below the low range for a few bars, implying a downward trend and a few bars later there is a reversal.

    Am I missing something brilliant? What about his "secret formula" for massaging the opening range as a predictor? Has anybody had astonishingly good results using that?

    There sure are a lot of people peddling plastic Holy Grails in this business!

  2. You don't predict.

    You react.
  3. I am tinkering with pivots as areas of increased speed or chop and resistance if I am already in a trade, simply areas to be aware of.
  4. Always preferred the Fibonacci Price Levels (Retracement) tool.
  5. Maverick74


    Have you even read "The Logical Trader"?

  6. even better, have u ever attended hog's classes?

  7. Maverick74


    Never! I don't need to listen to his moving average crap.
  8. Based upon your own words...

    Your misinterpreting pivot analysis and/or s/r analysis.

  9. why man, 20es points a day aint that bad innit...last time i even head him talkin' about shootin' for 40, those pivots zure do lots of good to him. R0R
  10. Ah excuse me folks.

    First for the original poster. Pivots do not "predict" anything. GannGalt is correct or partially correct might be the best way to put it.

    Pivots are just horizontal lines on a chart. A pair of pliers is just a tool in someone's toolkit. In both instances what matters is YOUR skills, your discipline and your judgement.

    While I am not interested in having a long discussion I can point you in the right direction.

    The best way to learn how to use pivots is to do two (2) things. First you should read up on the subject so that you have a decent background. Here is a good book reference that might help;

    Technical Trading Tactics by John Person, published by Wiley

    Then you need to observe in real time, how price "acts" when in proximity to pivots. In order to observe "correctly" you need a framework or reference point. For me, I use an organizing principle called "tests". Specifically I start with the belief that price is always testing specific price levels. Some of those levels are where long term investors belief that value exists. Some levels are places where short term players see opportunity to jump in and buy or sell for a quick gain. The reason isn't important. What IS important is that you learn to characterize the movements in a way that you can use for your benefit. For instance, when price moves toward a pivot, does it do so on small bars or what we call "wide range bars"? When price "touches" or "tests" a pivot, does it just barge right through? Or does it move through and then retrace? IF price moves through a pivot, does it "take out" that pivot on big volume or light volume? Does it do so at a particular time of day?

    IF you are a good observer, you can characterize the behavior of price as it moves toward and away from pivots and eventually make up a set of rules to guide your buy or sell decisions.

    As an example, I assume that price has "taken out a pivot" when it closes above (for buying) or below (for selling). I might use that pivot (plus a little cushion) as my stop loss point when I get long or short.

    That should be a good starting point for you.

    #10     Aug 10, 2006