Pivot Levels

[James Stock]

Quote from JackDaniel:

The ES has two sets of numbers from the previous day's trading that people use to calculate the pivots. Some people use the "all session" numbers, that is, the H/L/C from the evening, overnight in addition to the regular day session. Other people use the H/L/C just from the regular day session. This will cause the pivots to be in either exactly the same spots (if the overnight session didn't have much range) or slightly different, as they were today.

From the previous posts it looks to me like DB uses the day session numbers and ERIERAMBLER used the all session numbers. As I said, today's pivots were different from each other, but over the last month, they have varied very little between the two sets of calculations.

I've put up two charts with the different numbers up for a month or so, a few months back. The result was, you can use either numbers. It looks like an equal number of traders are using one or the other.

In other words, there doesn't seem to be a consensus as to which numbers everybody should use. For me, after my testing, I've decided to use the all session numbers and leave it at that.

Hope this helps.
jd

Thank you very much.

 

[mdl060374]

Quote from dbphoenix:

I got into this somewhere else, but it's easier to repeat myself than go look for it, so . . .

Think of the pivot level as the surface of a lake or a stream. The shortists go fishing here to find out if anybody's biting. They'll cast their lures over the surface of the water or even let them sink a bit to see if anybody bites. If nobody does, they bide their time (base) or do something else. (Reverse all of this for going long.)

In other words, the activity at these levels is an exploration to see what's what (you can come up with your own metaphors; poking around in a cave with a flashlight is also helpful). If nobody's home, nothing happens. But if there are packs of sellers just waiting for the breakdown, the breakdown succeeds. If there are greater numbers of sharks waiting to feed on the guppies who are shorting, then you've got a nice reversal on your hands.

Point is, you've got to have participants at these levels. Otherwise, nothing happens. Whatever happens is the result of whatever whoever's hanging around does. If they don't do anything, or there's nobody there, then the "pivot level" is just another line in the sand.

Sorry for the delayed response, but thanks to DB, Sulong, and Boomer for their input..

Now to my next question: Are these pivot points all calculated the exact same way, or are "proprietary pivots points" often used?

I am guessing the forumals arent tweaked that much...

 

[dbphoenix]

Today's pivot trade on the NQ. Suggested entries are provided using a 3m chart.

 

[erierambler]

thanks for sharing that Db, I can see your point about the NQ having more of a range. Took the short on the ES premarket this morning at 1110 and covered at 1107. Not much action.
You are using the ES to confirm action (at the pivot)before the trade , I assume?

 

[dbphoenix]

Quote from erierambler:

thanks for sharing that Db, I can see your point about the NQ having more of a range. Took the short on the ES premarket this morning at 1110 and covered at 1107. Not much action.
You are using the ES to confirm action (at the pivot)before the trade , I assume?

Hey, 3pts is 3pts.

Yes, I track the ES and NQ together, and sometimes the YM as well. They nearly always trade together, so it makes sense to use them to confirm each other. Once in the trade, of course, other management rules apply and the action of one doesn't necessarily influence what I do in the other unless it's something like, for example, a continuation entry.

But if you're going to use them together, there's nothing wrong with being rigid about your rules at the beginning. Nothing pops your balloon faster than losing on your first few trades.

 

[erierambler]

Regarding the use of pivots , Sulong had mentioned that he had no concrete method , and that applies to me as well. What i'm trying to determine is that by taking the trades ( reversals ), seeing what profit is made, whether the trade works or not and recording it so as to be able to think in terms of probability. In otherwards correlate the numbers or the mechanics to behaviour.
The only way for me to do this is to make the trade which is why my interest in the thread.

Would be interested in hearing from others as well , especially if they have already been there done that.

Casey

 

[Bankedout]

Quote from dbphoenix:

As I said in funky's thread, I wait for a bar with a higher low (if looking to go long), then enter on the bar after that, with a stop below the lowest low. I know some people just enter the trade when the PL is reached, but too often the price just breezes right through. I'd like to see some evidence of at least hesitation, preferably reversal.

Hi Db,

Once the bar with the higher low forms, do you enter at the market on the next bar? Or perhaps do you use a limit or a stop to enter at the next bar?

I'm trying to work on a pullback entry strategy for myself, and would appreciate any help you can give me on nailing a reversal.

If you have time, I made a thread laying down some thoughts for my entry strategy. I would appreciate any comments or suggestions. The thread is here:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=26275

Thanks in advance, and have a Happy New Year.

Banker

 

[dbphoenix]

Quote from Bankedout:

Hi Db,

Once the bar with the higher low forms, do you enter at the market on the next bar? Or perhaps do you use a limit or a stop to enter at the next bar?

Using a long entry as an example, I set the cover one tick below the lowest low, then add however many points I want to risk and place a limit order for that amount once that follow-on bar finishes (until it finishes, I don't know if it includes a higher low or not).

Today, for example, if I were to take the reversal at 1145/48, I'd set my stop at 1460.50, then place a limit order for, say, 1462.5, or 1463, or whatever, after the 1151 bar (3m) was finished and showed a higher low. This avoids all that angst about do I enter at the open or the close or use a stop-limit or whatever, none of which really has anything to do with the amount of risk one is trying to assume.

Reversals and pullbacks, of course, are two different animals, and a lot of people get into trouble by not recognizing that, such as when they keep trying to trade counter-trend or catch tops or whatever. But I'll get into that in your thread.

 

[Bankedout]

Quote from dbphoenix:

Using a long entry as an example, I set the cover one tick below the lowest low, then add however many points I want to risk and place a limit order for that amount once that follow-on bar finishes (until it finishes, I don't know if it includes a higher low or not).

Today, for example, if I were to take the reversal at 1145/48, I'd set my stop at 1460.50, then place a limit order for, say, 1462.5, or 1463, or whatever, after the 1151 bar (3m) was finished and showed a higher low. This avoids all that angst about do I enter at the open or the close or use a stop-limit or whatever, none of which really has anything to do with the amount of risk one is trying to assume.

So basically it sounds like you look at the place where you will be putting your exit stop (one tick below lowest low) and then calculate how many points you want to risk. Then wait for the bar with the higher low to completely form. After that has occurred you place the limit order for entry with the price based on the amount of points you are willing to risk. If the limit fills, you are in and manage the trade accordingly. I imagine sometimes the limit does not fill, though I'm not sure.

I guess I have to digest that idea a bit for myself.

Thanks for sharing,

Banker

 

[bobdec]

Quote from irikity:
I use % retracements not time, they can happen in 5 minutes or ah hour. I look to enter at the following fib levels 38%, 50%, 62%, and 79%. My exits is new 15 minute low. I have that set on my software and then just evaluate every situation on its own.


Do you use only fib retracements from the previous days high and low or do you also use intraday high and low pivots to evaluate the fib retracements?
Also what is the software you are using for your evaluation?