Is anyone using Pivot Points?

M

mgregor

Just wondering if any of you are successfully using pivot points, such as those generated by the Trade Prospector software?

Zboy gave me the following formula, which is very similar to the way the Trade Prospector software calculated the
BP1 and BP2 levels:

SR3 (pivot point)= [H + L + C]/3
BP1 (resistance)= SR3 + [(H - L)/2]
BP2 (support)= SR3 - [(H - L)/2]

I plotted a few of these on some charts of CIEN, CMVT, QCOM, etc. In some cases, they were pretty accurate support/resistance.

Are any of you using these to generate buy/sell signals? If so, could you comment on exactly how you use them?

Thanks!

 
I tried to use the CBOE pivot formula for a while (the same as your's) and it worked... but I find todays open low and high and yesterdays high and low are more widely followed.
Good Luck
 
El Cazador
What is the formula for todays hi/lo and yesterdays hi/lo to calculate the support/resistance points? Thanx
 
No formula for it. Just watch a 2 day chart. Does it break above yesterday's high? Go long. Breaks below yesterday's low? Go short. After the first 30 minutes if it breaks above the open... think long. If it drops toward the low of yesterday and pauses and buyers come in... think long. I think you can find more about this on Ken Calhouns's site... Daytrading University. Good Luck
 
Just a note about the high/low plays and the BP and SR equations MGregor posted-- anyone who tries these calculations out will find that they almost always are close to the day's high and low. However, they tend to be a little better to use (in my opinion) in the sense that the calculations take into account the stock's overall movement, and therefore usually produce numbers that are a little above or below the daily high and low, which I have found to be more accurate when watching the following day's action. Either way, you're probably looking at a net difference of 1/4 point whether you use one method or the other, so it's not a huge difference.
 
I believe you'll also find that they don't necessarily match the DS & BP calculations that Trade Prospector computes either (sometimes close, often times off by one or more points). The old pivot point calcs were put together by futures pit traders decades ago and were replaced long ago by newer support/resistance analytics when access to sufficient computing power became available. They're better than flying completely blind though.
 
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