Pivot points

Quoting traderjai_inhi

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Best thing to do, if you really want an unbiased answer, is to add it to your charts and see for yourself..

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Quoting BBPI_fxtrader

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it really depends, on the currency, current market conditions, etc, like traderjai_inhi better put them on your chart and observe them

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Quoting hanover

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Misterboy,

I use the following tools on the M15 charts. I would rate them in the following order, from most reliable to least, but it varies, and depends on the currency pair, and whether it turns out to be a high or low volatility day:

#1. Previous support/resistance (prior candle high/lows). 'Flipover' S/R tends to work best during 'gentle' trends. Double/triple tops/bottoms or congestion when price overbought/sold is often a precursor of a decent reversal, although watch for stoploss hunting. Big (high momentum) candles around these areas can mean that some heavyweight traders are pushing price, occasionally resulting in an eventual large move. Heavy S/R (e.g. 3+ rejections of a level) usually means a decent break either way; occasionally a breakout will retrace to fake out "dumb" orders, and then take off again. Re overbought/sold, probability is increased if all of M15, M30 and H1 all at/near upper/lower Bollinger band(20,2) boundary

#2. Fibo retracements 38.2, 50.0, 61.8. I stretch Fibos across all obvious candle high/low possibilities, and look for confluences

#3. Round numbers (e.g. price = X.XX00, or X.XX50). [Rates slightly ahead of #4 and #5, but depends on pair]

#4. Intraday pivot point PP (note: I use 0000 New York EST as my daily cutoff point)

#5. Intraday pivot levels R1,S1,R2,S2, etc; also mid-levels. If price respects pivot levels once during the day, it will occasionally respect another pivot level during the same day

#6. 200 EMAs (M15, M30, H1, H4, D1 - in no particular order)

#7. S/R diagonal trendlines (need at least 2 prior points) - works well when coverges with S/R (#1). Trendline + S/R break frequently leads to a decent move

#8. Confluences of correlated pairs with #1-#6, e.g. if EURJPY and GBPJPY both hit heavy S/R simultaneously, probability of reversal (or decent breakout) is greater

Look for confluences of #1 (especially) and #2, but all contribute to the possibility a greater number of traders watching (and placing orders around) each point. Also look for areas of "no man's land" - price will often move quickly across these areas, since there are likely to be fewer intervening orders impeding the movement.

With high confluence, you can try to anticipate the bounce, and set a very tight SL, for a potentially high R-value trade (e.g. 5:1). Exit losses quickly for minimal damage, and try again at the next high probability level. Where you have an area where 4+ levels converge within a few pips, take a long entry at the highest of the levels, with a SL just below the lowest; that way, multiple levels must fail for the trade to lose. Vice versa if looking to go short.

A less aggressive, but equally valid (depending on how you exit) approach is to wait for suitable rejection of a level, and then take a potentially lower R-value trade.

All of these S/R confluences are suitable points for both entry and exit.

Of course all olf this is very discretionary and an 'approximate' way to trade; much depends on how you interpret the levels within the context of trend, momentum, etc, and how you manage the trade after entry. Risk is greater when trading against the trend, you should generally be ready to exit sooner, as the move may simply be a minor correction (profit taking?) in the prevailing move.

If using this approach, avoid trading the crosses if the constituent pairs are moving in opposite directions, e.g. avoid GBPJPY if GBPUSD rising and USDJPY falling. In this case, GBPJPY will generally have a lot of long upper/lower wick candles giving a 'jagged' looking chart. Many of these wicks fall into 'random' areas, making analysis too difficult.

For an example of all this, see post #3 here.

David

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Quoting lostinspace

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Hi David

I've got to ask, despite all the potentially profitable approaches you posted above (some of which I use myself so I know from experience they 'work') you say you aren't trading profitably, why do you think that is?

This isn't a loaded question, I'm genuinely interested because so many traders seem to have the recipe for a profitable strategy but for some reason fail when putting it into practice.

Is the problem money management? Discipline? Patience? Why couldn't you put the theory into practice in a live market environment and profit from it?

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Quoting hanover

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Misterboy,

I use the following tools on the M15 charts. I would rate them in the following order, from most reliable to least, but it varies, and depends on the currency pair, and whether it turns out to be a high or low volatility day:

#1. Previous support/resistance (prior candle high/lows). 'Flipover' S/R tends to work best during 'gentle' trends. Double/triple tops/bottoms or congestion when price overbought/sold is often a precursor of a decent reversal, although watch for stoploss hunting. Big (high momentum) candles around these areas can mean that some heavyweight traders are pushing price, occasionally resulting in an eventual large move. Heavy S/R (e.g. 3+ rejections of a level) usually means a decent break either way; occasionally a breakout will retrace to fake out "dumb" orders, and then take off again. Re overbought/sold, probability is increased if all of M15, M30 and H1 all at/near upper/lower Bollinger band(20,2) boundary

#2. Fibo retracements 38.2, 50.0, 61.8. I stretch Fibos across all obvious candle high/low possibilities, and look for confluences

#3. Round numbers (e.g. price = X.XX00, or X.XX50). [Rates slightly ahead of #4 and #5, but depends on pair]

#4. Intraday pivot point PP (note: I use 0000 New York EST as my daily cutoff point)

#5. Intraday pivot levels R1,S1,R2,S2, etc; also mid-levels. If price respects pivot levels once during the day, it will occasionally respect another pivot level during the same day

#6. 200 EMAs (M15, M30, H1, H4, D1 - in no particular order)

#7. S/R diagonal trendlines (need at least 2 prior points) - works well when coverges with S/R (#1). Trendline + S/R break frequently leads to a decent move

#8. Confluences of correlated pairs with #1-#6, e.g. if EURJPY and GBPJPY both hit heavy S/R simultaneously, probability of reversal (or decent breakout) is greater

Look for confluences of #1 (especially) and #2, but all contribute to the possibility a greater number of traders watching (and placing orders around) each point. Also look for areas of "no man's land" - price will often move quickly across these areas, since there are likely to be fewer intervening orders impeding the movement.

With high confluence, you can try to anticipate the bounce, and set a very tight SL, for a potentially high R-value trade (e.g. 5:1). Exit losses quickly for minimal damage, and try again at the next high probability level. Where you have an area where 4+ levels converge within a few pips, take a long entry at the highest of the levels, with a SL just below the lowest; that way, multiple levels must fail for the trade to lose. Vice versa if looking to go short.

A less aggressive, but equally valid (depending on how you exit) approach is to wait for suitable rejection of a level, and then take a potentially lower R-value trade.

All of these S/R confluences are suitable points for both entry and exit.

Of course all olf this is very discretionary and an 'approximate' way to trade; much depends on how you interpret the levels within the context of trend, momentum, etc, and how you manage the trade after entry. Risk is greater when trading against the trend, you should generally be ready to exit sooner, as the move may simply be a minor correction (profit taking?) in the prevailing move.

If using this approach, avoid trading the crosses if the constituent pairs are moving in opposite directions, e.g. avoid GBPJPY if GBPUSD rising and USDJPY falling. In this case, GBPJPY will generally have a lot of long upper/lower wick candles giving a 'jagged' looking chart. Many of these wicks fall into 'random' areas, making analysis too difficult.

For an example of all this, see post #3 here.

David

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Quoting hanover

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LiS,

Don't want to disrupt the thread topic, I've sent you a PM.

David

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