Trading the Pivots

[JimmyJam]

Quote from bluegreen:

What indicaotr is the little read and green square dots above the time on your charts?

Hey bluegreen,

I use Medved Quotetracker and IQ Feed.

The Line is a customized Paintbar that tells me when the CCI Histogram is Above/Below the Zero Line and when it is Above/Below the 100 Line.

 

[JimmyJam]

Quote from DonKee:

Using the above stratgey would have resulted in at least a 9 point day. Oh well, we seem to hit the R2/S2 level about once per week.

There's always another trade coming round the corner. lol

Hey DonKee

Thanks for your succicnt analysis today.

When I used to trade of the pivots exclusively I would track them to determine what Pivots/Support/Resistance Level devlivered a trade and for how many points it went.

I'll be uploading a spreadsheet to assist everyone with that later on this, uh, morning.

 

[LondonUSTrader]

Quote from JimmyJam:

Hey DonKee

Thanks for your succicnt analysis today.

When I used to trade of the pivots exclusively I would track them to determine what Pivots/Support/Resistance Level devlivered a trade and for how many points it went.

I'll be uploading a spreadsheet to assist everyone with that later on this, uh, morning.

Pivots are very interesting. If you traded them the conventional way they would probably work 1/3 of the time.

I know of many successful traders who use pivots in combination with other things and that gives them a positive expectancy.

There are many different ways to use them. There have already been a few good threads on this subject. One from Lefty a while ago was rather memorable.

In many ways they are a self fufilling prophecy because so many traders watch these levels.

However, I think there will always be an opportunity to use them profitably in your analysis. The how then becomes much more important than the why.

“The real value of technical analysis is that everyone using some form of it or buying some interpretation of that analysis really believes by using it he will profit. By knowing where that person is and trading against him, when he liquidates his loser, he must pay the winner; that person should be you.” Trader X

 

[krishiyer]

Jimmy jam
R2/s2 works very well in high volatile oil,steel,commodity stocks (it hits 2,3 times a week compared to ES,ER2)
scalping OTM options works for me at R2 & S2.
I also use Medved QT.In the latest beta version,woodie's side winder etc is incorporated.
I will be interested to know more about the paint bar set up which I have not done yet
thanks

 

[JimmyJam]

Well, today (or actually, yesterday) was a good start, in the sense that I see I need to do some re-tooling for this thread to deliver what I want.

To make anyone who wants it the ability to independently analyze the market and take hi probability trades on their own.
***
Lets start with the Pivots.

"The success of a pivot-point system, however, lies squarely on the shoulders of the trader, on his or her ability to effectively use the pivot-point systems in conjunction with other forms of technical analysis"
article from investopedia on trading the pivots

Enclosed is a spreadsheet which has the following tabs:

Commentary - website with information and formula for calculating the Pivots

E-Mini S&P - Pivot formula as well as the formula for how to determine the Trend, and its current strength.

Pivot Diary - Lists the trades, the time they took place, and the trade result.

Trade Tracker - A spreadsheet that you can customize to track your performance.

edit: to update the spreadsheet, simply update the day's Open, High, Low, Close and point the cells at the top of the spreadsheet to the next row down. Let me know if you hve any questions.

 

[JimmyJam]

Now, to the charting.

I found the method that I was using previously to be too complicated and not nearly as robust as I would like it to be.

So I am revamping it to trade using a Simple Moving Average Strategy (I will supply the sources for the Pivot Trend Formula and Trading the Moving Averages in a later post, as I want to get this info posted and get some sleep) .

The Setups using the Moving Averages are as follows:

Trade #1: Continuation Buy / Continuation Sell
Trade #2: Reversal Buy / Reversal Sell
Trade #3: Breakout Buy / Breakout Sell

Explanations:

Trade #1: (the middle area of the trend) Price action crosses over the 18 and 40 SMA's trades back in-between them, and then continues trading back in the direction of the 18 SMA.

Trade #2: (the end of one trend, beginning of another) Price action crosses over the 18 and 40 SMA's, trends - may generate a Continuation Signal - then trades back between the 18 and 40 SMA's, and reverses the trend, breaking through the 40 SMA.

Trade #3: (trade represents very strong market action) Price action crosses over the 18 and 40 SMA's, trends, retraces a little bit, but never crosses back between the 18 and 40 SMAs, and then continues in the previously established direction.

Following are the trades representing these setups which are listed in the sample trade diary.

 

[JimmyJam]

Tuesday's Trade (Monday no trade was actually generated, made an error in the spreadsheet).

Trend is Bearish, so, according to the system being listed here, sell when a pivot, support, resistance area has been hit.

P.S. Never trade Wide Range Bars using this system.

 

[JimmyJam]

Wed., here are what two reversal sale trades look like.

The first trade entered was closed on the Bullish Cross over.

 

[JimmyJam]

Thur. the action was bullish, so NO TRADE was generated using this method.

As an alternative to using the 1 Day Pivot vs. its 3 and 5 Day Averages, you may track the TRIN, and read as Bullish any readings below 0.85, and Bearish any reading above 1.05.

 

[JimmyJam]

After the market was moved up on Thur, Fri represented an easy sell opportunity.