Trading the Pivots
- Thread starter JimmyJam
- Start date
I'd like to have a risk:reward of 1:2, but the probability of me getting 8 pts from a move isn't very high (somewhere around 35%-40%), whereas I am confident that I can get at least 4 pts on a trade using this methodology.
That's why I seperate the contracts into two sets (with one being closed at 4 pts of profit, and the other being closed MOC or when the trend ends - depending on what you use to define trend).
Of course, you can tighten your protective stop, but if you do so you will find that you will be stopped out of a considerable number of trades that would have ended up going your way.
There is also the option of only taking only continuation trades - which are, as anyone will tell you are just pullback trades in the direction of the current trend. You could probably use a protective stop of 2 pts, but then, of course you will miss all of the reversal trades, and the continuation trade will result in less profit.
The system will deliver (logicially) around 70%-80% of the time, so just do the calculations, and you'll find using good money management it works pretty well.
But as mentioned previously, you must work with the sytem, famaliarize yourself with it (2,4, 6 weeks - or more - of work) and tweak it so that it fits your comfort level for trading.
Best,
JJ
Hello:
I'd like to try to help if I can..
This was likely to be a consolidation day. Previous up days cause imbalances that have to be "digested" before the market can move on...
Second thing is the use of pivots. I have no argument with your approach, but I have to say when I see a market open down from the previous session, I look for continuation to the nearest support. Sometimes that support is at a formal pivot level, sometimes it is at an area of previous price congestion. This is why I watch and observe how price acts BEFORE putting on a position.
The most valuable thing I can say to you on this subject (today anyway) is put a horizontal line through the LOWEST CLOSE and scan left. See for yourself what the market is using for support today.
Good luck
Steve
I'd like to try to help if I can..
This was likely to be a consolidation day. Previous up days cause imbalances that have to be "digested" before the market can move on...
Second thing is the use of pivots. I have no argument with your approach, but I have to say when I see a market open down from the previous session, I look for continuation to the nearest support. Sometimes that support is at a formal pivot level, sometimes it is at an area of previous price congestion. This is why I watch and observe how price acts BEFORE putting on a position.
The most valuable thing I can say to you on this subject (today anyway) is put a horizontal line through the LOWEST CLOSE and scan left. See for yourself what the market is using for support today.
Good luck
Steve
Thanks Steve,
That's a nice piece of information there. I I'll have to wait and see how I can quantify it for this system, but I'll definitely file it away for later review.
At worst I'm expecting a consolidation day, at best, because the trend is still up, I'll looking for the Gap down to be filled.
Best,
JJ