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Trading with Pivot Points

  • #1
  • First Post: Oct 1, 2005 8:11am Oct 1, 2005 8:11am
Hi All;
I m relatively a new trader, however, I got experience with most trading indicators and systems but I haven't build my own system yet. I newly have investigated the issue of Pivot Points and I found it very useful and profitable, however, I got confused to the rules taking place in such system. For example a rule stating that one BUY at support and SELL at resistance is fine but it can be violated some considerable times. The question is what other filters one can use along with Pivot Points?
In Peter Bain's book he states the above rule at the end of the book however, he started the book with some trades going along with the violation of the pivot levels and I felt confused a little!!
Could we share our whole experience with those trading pivots?

Thanks;
  • #2
  • Oct 1, 2005 11:03am Oct 1, 2005 11:03am
Quoting abedewi
Hi All;
I m relatively a new trader, however, I got experience with most trading indicators and systems but I haven't build my own system yet. I newly have investigated the issue of Pivot Points and I found it very useful and profitable, however, I got confused to the rules taking place in such system. For example a rule stating that one BUY at support and SELL at resistance is fine but it can be violated some considerable times. The question is what other filters one can use along with Pivot Points?
In Peter Bain's book he states the above rule at the end of the book however, he started the book with some trades going along with the violation of the pivot levels and I felt confused a little!!
Could we share our whole experience with those trading pivots?

Thanks;
I'm just starting to use pivots myself, but the attached document may be of use to you.

Dial
Attached File(s)
File Type: pdf Pivots.pdf   271 KB | 4,228 downloads
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  • #3
  • Oct 1, 2005 1:42pm Oct 1, 2005 1:42pm
Hi

I got an PDF on Pivot Point...may be could be useful....

CHeers
FxBee
Attached File(s)
File Type: pdf Pivot%20Trading.pdf   233 KB | 21,678 downloads
  • #4
  • Oct 1, 2005 3:25pm Oct 1, 2005 3:25pm
Quoting diallist
I'm just starting to use pivots myself, but the attached document may be of use to you.

Dial
i will tell you a little secret from playing pivots for years. if you decide to preplace lines from monthly, weekly and daily pivots you are going to have them all over your chart and it causes you to freeze because they are all over the place. i have found at least for me to only put the actual pivot line on my chart, its is the most important anyway. dial since you are familiar with trailing entries using ma crossovers wait for the ret to come back to your ma and look for confluence at that point with a pivot and if your lucky a fib ret to boot. jim
  • #5
  • Oct 1, 2005 6:41pm Oct 1, 2005 6:41pm
Quoting james16
i will tell you a little secret from playing pivots for years.
might be just me, but for FX I've found that plotting the GMT 00:00 Open to have more import than pivots. I do plot the weekly pivot, as I believe it to be a reasonable "line in the sand" for trend bias
  • #6
  • Oct 1, 2005 7:31pm Oct 1, 2005 7:31pm
Well, I have taken several courses who's main focus was pivot points. I was using them pretty frequently when I started.

I now think, that so many use the normal pivot point calculations, they've become a target for Brokers & MM's. My strategies using pivot point calculations, especially daily...seem to mostly backfire.

However, I do plot my own pivot points during the day. Just by observation you can see where price congregates...so I just draw a pivot there. Sometimes it corresponds to the Pivot point calculations, more often then not...it doesn't. But my hand drawn ones are almost always more accurate.

Just my lone observation
  • #7
  • Oct 1, 2005 8:13pm Oct 1, 2005 8:13pm
Quoting SouthernFried
Well, I have taken several courses who's main focus was pivot points. I was using them pretty frequently when I started.

I now think, that so many use the normal pivot point calculations, they've become a target for Brokers & MM's. My strategies using pivot point calculations, especially daily...seem to mostly backfire.

However, I do plot my own pivot points during the day. Just by observation you can see where price congregates...so I just draw a pivot there. Sometimes it corresponds to the Pivot point calculations, more often then not...it doesn't. But my hand drawn ones are almost always more accurate.

Just my lone observation
the reason playing pivots doesnt work in a reliable manner is because most people play them as a breakout and they get caught on a quick pullback. you can play them succesfully by playing them after a move through and a ret back. i play them like this but only when there is confluence at the pivot level when it comes back. just my two cents. jim
  • #8
  • Oct 1, 2005 8:17pm Oct 1, 2005 8:17pm
Quoting Beachie41
might be just me, but for FX I've found that plotting the GMT 00:00 Open to have more import than pivots. I do plot the weekly pivot, as I believe it to be a reasonable "line in the sand" for trend bias
just so i understand beach you are saying that the price level at this particular time you use as a kind of support and resistance. very interesting. jim
  • #9
  • Oct 1, 2005 8:21pm Oct 1, 2005 8:21pm
Quoting james16
just so i understand beach you are saying that the price level at this particular time you use as a kind of support and resistance. very interesting. jim
yes, below the open I'm biased to short & vice versa
  • #10
  • Oct 2, 2005 4:48am Oct 2, 2005 4:48am
Quoting james16
the reason playing pivots doesnt work in a reliable manner is because most people play them as a breakout and they get caught on a quick pullback. you can play them succesfully by playing them after a move through and a ret back. i play them like this but only when there is confluence at the pivot level when it comes back. just my two cents. jim

Jim, I do agree with u that most breakout get fakeouts especially with pivots, however, I tend to combine Pivots " I use daily calculated at 17 EST " with other indicators - most importantly MACD, Stochastics and DMI - for example, in a non-trending situation, prices at upper R1 and stochastics overbought, I tend to SELL and vice vers for S1. In a trednign situation, I tend to look for MACD pattern and place limit orders above pivots waiting for a breakout. what do u personally think about that?

Thx for u guys who submit files about pivots.
  • #11
  • Oct 2, 2005 2:57pm Oct 2, 2005 2:57pm
Quoting abedewi
Jim, I do agree with u that most breakout get fakeouts especially with pivots, however, I tend to combine Pivots " I use daily calculated at 17 EST " with other indicators - most importantly MACD, Stochastics and DMI - for example, in a non-trending situation, prices at upper R1 and stochastics overbought, I tend to SELL and vice vers for S1. In a trednign situation, I tend to look for MACD pattern and place limit orders above pivots waiting for a breakout. what do u personally think about that?

Thx for u guys who submit files about pivots.
welcome to the forum abe, i think thats great if it works for you. any time someone posts a strategy i go look for myself to see if i can incorporate any of it into what i do. everyone should do this you never know what you may find. jim
  • #12
  • Oct 2, 2005 3:30pm Oct 2, 2005 3:30pm
These pivot points are how I trade a sideways channel. I allow the market to show me the top and bottom points and then I will wait for the next test. There is usually a double test of that point. Buy/sell on the second failer as long as it don't exceed the first test limmits.
I don't trade break outs because of the false break out factor wich happens more often than not.

Also I use RSI set at 21 and stochastics set at 8,5,5 to determine entry they'll usually tell me if a 2nd test is complete.
I use the 40,50,60 lines on RSI as pivots too. For a buy signal the line won't drop below 40 and for a sell signal the line won't rise above 60, but will test these points. A failer to fall below 40 signals buy and failer to rise over 60 is sell. Then the cross of the 50 line confirms the trade. If it fails at 50 then a reevaluation is in order and that is when I might pull out of a trade.
Right now on the 1 hr chart(eur/usd) the line is between 45 and 50.If the price retest the bottom(1.1977/99) and RSI fails to fall below 40 its a good buy signal. But wait for the second test. On the second test the RSI should move near 45/50 range. Thats the buy on 2nd failer signal. If RSI is still at 40 on the 2nd test than use causion there may be a 3rd test and wait for RSI to rise to 45/50 range. This isn't set in stone. Sometimes the price will peek its head to the other side like 39/38 and then draw back quickly on the peroid change.
When I get that buy signal on the 1 hr chart I then wait to see the same signal develope on the 5,1 min charts. By waiting for lower charts to signal you can cach it if it decides to go the wrong way befor you enter.

Then I wait for stochs to be over sold and curled up. When it crosses the line that runs with it I enter. Again first observing this on 1 hr chart then 5,1 min. Opposite applies to selling on the top side.

hope this helps

Dave
  • #13
  • Oct 15, 2005 5:42am Oct 15, 2005 5:42am
I've been with Pivot Points for a while and my trading profitability and success has been substantially improved and that's why I want to share with you my own personal finding and possible strategy.

1- With pivots, you ve a clear insight about what is going on on the market and you're always presented with a projected high and low for the intra-day trading.It's amazing how prices do regard and respect these points at 90% of time like if the market has these points in the brains of traders.
2- Stop Loss has been kept to minimum, since I consider a 15 pips (plus spread) beak out of a pivot level a valid break and I don't ve to keep such position opened and re-evaluation is essentially needed.
3- Limit orders for profit can be easily made on the next pivot level.
4- If the Pivot system is contraced during the day i.e. the distance between major levels are less than 20 pips, then I trade these levels and forget about the Mid points, however, if the system is deflated, I tend to highly regard the Mid points.
5- Now we ve a system that provides us with clear exit and stop loss strategy, the point remains with the entry. Entry can be also signaled in combination of a MACD and DMI of a slower time frame with MACD and Stochastics on a faster time frame.
6- At 10 pips profit I move stop loss (previously made at 15 pips+spread) to breakeven with a trailing stop of 10 pips until it hits the next pivot level.
7- Most indicators are lagging market actions and you may enter late at most instances, however, with pivots, you're anticipating market actions as they appear.
In the attached chart (EUR/USD 10 MIN ON 14 OCT 2005 - YESTERDAY), I entered long at the red side arrow and it was profitable, however, market retraced to the central pivots and i protected my profits by trailing stop. Then I entered long again at the pivot point "green up arrow" using the same trailing stop mentioned above until it hits the next pivot level which obviously price stopped slightly above it. Please note that price couldn't break the central pivot point during the day and tried twice to made it but failed which was an additional confirmation for my long positions.
this was a 10 min chart, kindly regard the MACD and Stochastics actions which again confirm what I was doing.

In conclusion, I think Pivot Points are valid trading system that needs a little practice which once there, you're going to be profitable in 80% of your decisions.

Thx
Attached Image
  • #14
  • Oct 15, 2005 3:01pm Oct 15, 2005 3:01pm
Great strategy, thanks. It worth keeping in mind your strategy. Yes, Pivots are great things.
kiss the trend
  • #15
  • Oct 15, 2005 4:53pm Oct 15, 2005 4:53pm
the last 2 trades I made in my thread were pivot point trades. One was bounce on pivot and one was break of pivot. You'll find exact details on entry and exit of both types in those posts .


Dave
  • #16
  • Last Post: Oct 19, 2005 6:17pm Oct 19, 2005 6:17pm
Another good "arrow" to add to your "pivot point trading strategy" quiver is knowing session highs/lows.

For example, if you're trading the EUR session, know where the high and low was for the earlier Asian session. Sometimes the these levels are near pivot points, so you would want to wait for price to break both levels before trading a breakout for example.

Or let's say you're trading during the NY session, and price breaks a pivot level. Usually one would try and take profit at the next pivot level, but if there is a EUR session high level in between these two pivot levels, you may want to think about taking profit there or at least protect your profits since there will be a chance price will bounce off the EUR session high level instead of rising to the next pivot level.
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