Down The Trading Daily Pivots Rabbit Hole

Forex Pivot Point Trading are used today by Forex Traders and are measured on the previous days move and trades are entered when the market hits a support or resistance line of the pivot point providing your OB/OS indicator is in agreement. All the support and resist lines are put in place 1st thing in the morning. Then you wait till the market to hit those entry Points.

This continues a series of articles dedicated to revealing the yearly pivot points of each of the major currency pairs. This article is a ‘cheat sheet” of sort that you may want to print out and have handy so when price action tags any of these potential support and resistance levels, you will be ready to act. Past performance is not an indication of future results, however, the evidence supporting the effectiveness of yearly pivots is abundant. But you may be …

Contrary to what some might believe, trading Forex with Pivot Points are perhaps the most popular method used in trading the financial markets today. Long before the invention of computers this was the method employed by the traders in the pits to determine hidden support and resistance levels.

Getting back on track to the topic of trading daily pivots.

The Pivot Point is still used by experienced floor traders and technical analysts alike. The major advantage now is the fact that we now have computers and can calculate our points well in advance. Many charting packages can calculate them for you automatically, thus enhancing the use of Pivot Points.

Whilst there is much more to Pivot Point Trading in Forex Trading than we will be mentioned in this section, the intent of this exercise is to introduce you to the notion of trading Forex with Pivot Points.

How Can This Be?

Remember the market can only go up, down, or sideways. It is like an elastic band that has been stretched, sooner or later it will rebound to an equilibrium point where the market is in balance, and then stretch the opposite way only to rebound and reach another balance point. Then some fundamental announcement or happening will drive the market in a new path and so on day after day. Pivot Points can aid us in determining how far that elastic can stretch before it rebounds.

Stocks fell this morning. Hard. Last we checked, the Dow was down by more than 300 points. Gold dipped too, shaving $20 off the previous session’s $45 per ounce gain. And energy prices were down across the board, with a barrel of oil trading just a touch above $85. Maybe investors thought Mitt was their man, that he would carry forward real change…the kind Obama promised but never delivered. Maybe they thought the spending would stop under a Republican president, that …

The point of the story? How does that help you to be a 12-minute trader? Simple. The point is the market is controlled. The market’s ‘insiders’ know where the market is going and how fast it will get there. They follow specific trading rules, one of whom is pivots. Here’s a trick to help you’ll be a 12-minute trader: Just learn the insider rules. Buy when they buy and sell when they sell. Be the market’s shadow. Follow the markets’ rules.

What are the pivots used by movers and shakers in a controlled market? Pivots are support and resistance price levels that permit the movers and shakers to control daily highs and lows during the trading day. There are a total of 17 Futures trading pivots– eight intraday (occurring during 1 trading day) and nine inter-day (occurring over more than a trading day). Futures Market movers and shakers use Futures Pivots and stock market movers and shakers use Stock Market pivots. To be a dependable 12-minute trader, pivots need to appear on your technical analysis charts. Without pivots, it is hard to trade because you will not know where the market may reach for highs and lows.

Whilst there are many time frames that can be used only for calculating Pivots, for the purpose of the present exercise lets focus on the daily time frame (I.e.: 24hr) Pivot Points are calculated using the previous days, Open, High, Low, and Close figures. There are many Pivot Point calculators available on the internet so you do not have to waste your time doing the calculations manually. Also bear in mind the longer the time frame you’re using the longer you must be willing to stay in the market or to await the next entry point.

Pivot points unlike many other indicators are an objective tool. Because they’re mathematically calculated, there can not be one answer for a given time period.

Many subjective indicators like Fibonacci retracements, (and I am a great fib fan) Elliot waves etc. can have different people trading in different directions during the same time due to individual interpretation..

The PP’s can help you to provide for the next day’s highs and lows in advance. PP’s can give you anything from 4 to 8 support and resistance levels. However you still have to be able to determine the trend to become a successful PP trader. Pivot Points also work best in a trending market.

Pivot Points can give you exact entry and exit points, rather than enter markets that are in the midst of a run, or about to convert the other way. Here is where we use other indicators to assist on the entry or exit. If the market stalls at a Pivot Point level. You have an overbought or oversold indicator that will serve as a good time to get in or out. Or if a Fibonacci level coincides with a Pivot Point level it can make a strong case to specify or exit a trade. If the market is bullish and your favourite indicator isn’t near overbought, when it hits the first resistance level then you probably have a great case to remain in the market and make your profit target the next Pivot Point resistance line. The break above the 1st resistance level can then become your new stop or stop reverse.

Obviously the reverse is the case of the support level as well. By combining the Pivot Points with your favourite indicator you can develop your own trading system that no one else uses.

Trading for the day will probably remain between the 1st support (S1) and resistance (R1) levels as the floor traders make their markets. Once one of these levels is penetrated other traders will be attracted to the market, and should the second level be breached, the longer term traders are attracted to the market.

In the first part of the 2000 ‘s, the NASD increased the minimum account requirements for day trading stocks to $25, 000 which eliminated many day traders from taking part in the stock market. Seeking out other financial instruments in which to trade short term, day traders moved over to emini index futures as a result of this new pattern day trader rule and found a new place in the futures market. They soon discovered emini day trading reduced the amount of after market hours spent researching sectors, stocks and stock charts in order to locate possible stock trade set-ups before the financial markets opened each morning. When trading eminis, the dealer is only focusing on one market and one instrument which will be traded everyday, so there is no requirement for hours upon hours of research and scanning through hundreds of charts.

Whilst there are many other aspects to Pivot Point trading why not try this simple method first and see if you are able to develop your own strategy by using your existing trading technique’s in consultation with the Pivot Points.

QUESTION: which is the best daily pivot learning book in share trading?
i want to learn about daily pivot share trading, please suggest me the best book to get the information to learn about daily pivot methods.

  • That might be the book by John Person: 'Complete Guide to Technical Trading Tactics: How to Profit Using Pivot Points, Candlesticks & Other Indicators.'