The idea is that often S&R levels are not bounced off exactly. Sometimes a bounce off support comes a bit above support, sometimes it breaks support a bit and then bounces. The idea is to create a tight band above and below the level. Now we watch price action in this whole zone, as opposed to just at the line. The size of the band... that can be researched.. It can be in ticks, or it can be in % or it can be ATR(10)/2 for example. We can research what size of bands is optimal.
How would you trade zones? I will tell you. When you get in the zone you pull partial triggers and use scaling. These advanced techniques will serve you well. (when you get in the zone and chop occurs then wash trades are awesome positioners... There is no chatroom or forum that can illustrate this live...so forget it. Just go with the flow between the zones. (they are definately not exact lines and instrument dependent) Michael B.
Exactly. But you gotta be ready for the pain of an occasional trade through. That's where the scaling, scalp, and washes help during the turn.
"Classic" pivots on the ES R2 1230.25 R1 1227.00 PP 1224.00 S1 1220.75 S2 1217.75 "My Modified Pivots" R2 1231.50 R1 1227.00 PP 1224.50 S1 1221.00 S2 1216.75 So my zones were R2 1230.25-1231.50 (actual high1231.00) R1 1227.00 (minor pause) PP 1224- 1224.50 (close 1224.50) S1 1220.75-1221.00 (significant resistance point) S2 1216.75-1217.75 (actual low 1217.50) Were these "zones" important to today's trading. To me they were, and I guess a few other trader's as well. D.
The "zones" don't always end up so tight. Just happened that way today. Oh yeah and today's open = close = PP. The zones were worth illustrating today because they worked perfectly. No "trade throughs". That is not always the case. I typically widen "My Modified Pivots" to incorporate an expanded range. But this is volatility based, and of course as the day progresses you need to think about what is happening, is there news, did London get bombed, etc. Anyways just thought I'd f/u on an impt concept in trading. The scaling, swaps, washes, scalps etc. are ways to minimize risk in the "zones. D.
Sunny not to hijack your thread but I do like the topic... Todays classic pivots: R2 1237.75 R1 1230.75 PP 1224.25 S1 1217.25 S2 1210.75 "My Modified Pivots" R2 1239.50 R1 1232.75 PP 1224.00 S1 1218.00 S2 1212.00 With the exception of the PP, these zones were not helpful. So, to be fair you can only use these numbers to assist your trading not as the "backbone" to a system. But it helps to have sign posts planted before the day starts and lean on them as necessary.
Yea, the pivots are are whipsawed thru 200 times more often than not. What do you do if goes back and forth thru the pivot 5 times? what good is it?