Thanks guys...one last thing...anyone done much research on the success of daily/weekly pivots. Or using previous day HLOC information for support/resistance?
Pivot points work like magic. It is still one of the things that I keep up with. You have to know which pivot points would matter for that specific trading day. Pivot points tend to work better as resistance points, rather than support. For support pivots, the turn around tend to occur after the price kind of penetrated through the pivot point.
Ripley, I agree. And "magic" is a good word to describe how pivots work. They're leading rather than lagging indicators. It's uncanny how price either turns at the pivot, or at a minimum, loses momentum for a few bars. I assume their effectiveness is due mainly to self-fulfilling prophecy. You can even see the orders pile up in market depth right around the pivot levels, showing that traders are looking to sell the resistance or buy the support. Having acknowledged that I believe pivots are the real deal, let me also admit that I haven't developed a strategy around pivots. Do you have a setup or two that you feel rings the register with nice consistency?
Pivot points are just like Fibonacci numbers. It works because its the nature of the markets. Its like throwing up an apple, it has to come back down. Not only that, most everybody.. floor traders, hedgers, novices.. everyone keeps up with pivots or some kind of varition to pivots. Pivots also work well because 70% of all trading days are just range days. There is no way to design a trading system based on pivots, unless its very long term oriented. But, it can be incorporated well into any trading system.
do pivot points change each day and if so, how were they dependable? let's change the wording.......... how dependable were they? will the question be answered honestly ..........or forumized......
Let's say price opens around the PivotPoint (PP) and heads up. Resistence is expected at R1. A strategy might be to place a sell limit order at R1 with a 4-6 point stop and a 6-8 point profit target. The theory being that price either (1) turns around at the pivot; (2) stalls at the pivot or (3) pokes right through the pivot and keeps going. Either (1) or (2) would likely give you your 6-8 points, and (3) is the least expected occurence. I haven't tested the above scenario. Would it be your opinion, Ripley, that this strategy is doomed to fail? Also, may I ask, what do you mean by long term strategy in regards to using pivots? Using weekly or monthly pivots? Thanks in advance for your views.
porgie doesn't know how to calculate pivots? lol... H+L+C / 3 Pivots are based on the three most important prices of the trading day. High, Low and Close, and thats why pivot points are very very very important.
ripley...........using the word but is indicator........no confidence in pivots.......u have seen too many blown through like wet newspaper..am i correct?