Disliked{quote} AUDUSD Aug 25 Sydney 9am For all you Fibonacci Pivots fans, - you know that last week's range was huge for this pair, and based on its High, Low and Close the Fibonacci Pivot levels are quite wide apart. - reason why I stopped using this pivot is this wide range bar/candle WRB situations. - I prefer to check its ADR and AWR, and then use the price RN and BRN levels plus PPA when I look for entries and exits. {image}Ignored
They miss one point that is Power of Direction . Yes 50+/-% of the week if you buy with Pivot low you may gain.
Some people say they they understand fundamental to avoid those risk of strong move. But the truth is just like 2020 no one imagine covid-19. No one understand this kind of wild move come before we see in the chart.
Pivot make us over think and Pivot level don't accurately works example.
1. you get a buy signal but you see just 30 pips above you have a pivot level, you tell your self if the price break this level after that I will open trade.
Price break the level and when price close above the pivot level you see price close above 20 pips. so if you enter here you already late 30+20 =50. you increase your stop 50 pips more than initial risk. Now you don't know this trade will works or not if this trade don't work congratulations because of pivot you lose 50 more pips.
2. price don't react to pivot level to the point. You enter the trade break of pivot level and give stop just above the level. you may see price hit you stop and now price is going your directions. Congratulations Pivot just destroyed your normal trading edge.
Ok enough knowledge distributions. Lets look why Pivot guru DAVID use Counter trend rather than trend continuations.
Actually to trade trend continuations there is nothing better than EMA or MA. Problem is market not always trend. Just like problem is market not always range. in a ranging market support and resistance works well. You don't need BB to trade top and bottoms of the range, You don't need Pivot to trade tops and bottoms of the range. You can not trade Trend continuations with the pivot because pivot will destroy your early entry, Pivot will influence you trade false pivot break entry the the Trend continuations.
After understanding Pivot people trade counter trend with pivot.
Do I think this Pivot method is conceptually right, Answer is yes and No.
Yes in a sense that forex market is min reversion, highly Algo driven market, Since you can apply Buy low and Sell high in the forex market with a normal sense no one knows what is the low and what is the high of any currency pair. we can use Pivot to trade mean reversion.
Some people use EA to trade Pivot they have their own challenges.
No pivot trading is not conceptually right, Because they over look the power of directional move.
Most of the bank understand the power of directional move that is why they use MA. which many traders don't like.
Attached Image (click to enlarge)
MA provides the market's current direction and strength.
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