Pipsaholic
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most traders small and big use them so use them along with price action. Also, study traders psycology which is king.
Pivots point calculation are based on previous day high, low and closed price of a stock. It provides three resistance and 3 support levels which work gr8 on sideways or trending market.
There are some days when you have to avoid using pivot point when some news is going to effect the stock price etc.
All indicators work well but have to do a good research which indicators work in what type of market scenario and when they have to avoid it.
Can read more on
Tutorial on Pivot Point
the hare
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try plotting some lines at random levels, then repeat whatever analysis you did that led you to believe pivots where "useful".
If you can prove a statistically signifcant difference between the random lines and the pivots, I'll post a picture of my **** on t2w.
What a feckin surprise that price is either above, below, or pretty much the same as it was yesterday. Who would have believed it !
If you can prove a statistically signifcant difference between the random lines and the pivots, I'll post a picture of my **** on t2w.
What a feckin surprise that price is either above, below, or pretty much the same as it was yesterday. Who would have believed it !
Hare..
Just out of interest, do you share the same opinion about fibonacci as I have always felt just the same way about fibs as your last point!
T
Just out of interest, do you share the same opinion about fibonacci as I have always felt just the same way about fibs as your last point!
T
DionysusToast
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Quite true - in fact it is amazing how well random lines work! Or rather not when you look at the amount of price points, a little leeway either side and a few cognitive bias.
Most practitioners of TA do not do the sort of testing you describe. When you see randomness 'work' as well as mathematically derived price points, then you have to have a total re-think.
BTW - no photoshopping that pic to make it bigger.
Lord Flasheart
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The points raised are probably correct,but that does not mean they dont work, pivots and fibs can be made to work. one thing about pivots is how they are calculated. It totally depends on the software you are using.some will take from 12am to 12 pm and others from the exchange open and close. So if you look at it that way and that forex is 24 hrs,pivots are total B3llocks. Fibs will have more reliability about them simply because people look at them and trade of them. They are often also areas of resistance which adds strength to them
Well, let's say that they do not work any better than anything else. When you come to imagine the Dow, with 8000 points and the Dax/Ft with 5000 there is no way,IMO, that any pivot is going to to be reliable within 40-50 points. That, to me, makes it useless for a day trader. These are zones and, when one comes to that decision, what do you have? In any case, they are just as likely to carry on, in which case you get to the next one. Never mind, keep going! one of them will be right and then we can debate the reasons why it turned there, instead of lower down.
the hare
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I'm probably being a little unfair on pivots. I have seen evidence to suggest that in markets that tend to mean revert fading the pivots gives a slight edge. However, its not really tradable for reasons that I wont go into at this point (basically you dont know which pivot to fade at !)
I have a love hate relationship with fibs. If you look at historical swing points then there does seam to be evidence of clustering around the calculated levels. In most of the academic studies that I've seen, the 61.8 level is usually just about statistically significant.
I've not really spent much time looking at this, but they do seam to work well when there's a confluence from different timeframes, and I do pay particular attention when extensions from prior impulse moves on the faster timeframes coincide with retracement levels from the longer timeframes.
I'm far more inclined to use prior swing points, or areas where previous price action suggests S&R than a level based from an arbitary calculation. I tend to trade from 1 minute charts anyway, so fib levels tend to become rather a wide zone rather than a clear line in the sand, so they dont really form a reliable form of S&R to trade off. I must admit though, I do use them for exits far more than I should
