I think they only work because they are self-fulfilling indicators. So many big and small players use them on all time frames. And if coupled with psychological levels, a basic profitable trading system can be created.
The question is: why are there so many variations of pivot, support and resistance calculations? Why not stick with the basic calculation (Pivot = Yesterday's H+L+C/3)? Again, if everyone is using the same basic calculation all over the world, isn't that a bad idea to calculate it in any other way (Fibo, DeNapoli, Camarella, custom calculation, etc)?
I actually prefer a support and resistance level based on the price movement itself rather than a straight line level, like MA Channel, Bollinger Band, etc. It makes more sense. But we're here to make profit, not to make sense. So I guess using whatever the majority of the traders in the world is using seems to be the best use of an indicator, and the possible Holy Grail. That way, we will get the same signal as the major players, and as soon as they act on it, we simply follow suit.
What do you guys think?
The question is: why are there so many variations of pivot, support and resistance calculations? Why not stick with the basic calculation (Pivot = Yesterday's H+L+C/3)? Again, if everyone is using the same basic calculation all over the world, isn't that a bad idea to calculate it in any other way (Fibo, DeNapoli, Camarella, custom calculation, etc)?
I actually prefer a support and resistance level based on the price movement itself rather than a straight line level, like MA Channel, Bollinger Band, etc. It makes more sense. But we're here to make profit, not to make sense. So I guess using whatever the majority of the traders in the world is using seems to be the best use of an indicator, and the possible Holy Grail. That way, we will get the same signal as the major players, and as soon as they act on it, we simply follow suit.
What do you guys think?