Pivot pionts and confirmation

[phatmike]

Hi,

I’m looking into the idea of using pivot points on previous month data as opposed to previous day data. I’m finding it hard to decide on what additional indicator I should use as a conformation when the price reaches one of the pivot levels. Does anyone have any suggestions?

Thanks

 

[egro1egro]

Hi,

I’m looking into the idea of using pivot points on previous month data as opposed to previous day data. I’m finding it hard to decide on what additional indicator I should use as a conformation when the price reaches one of the pivot levels. Does anyone have any suggestions?

Thanks

It probably very much depends on the market you are working in.

Which pivot points are you talking about? The original ones, as described by Livermore and other old traders (which are basically just new maximums as the price goes north), or these fancy modern (H+l+C)/3-derived ones, which in my opinion have nothing to do with reality...

 

[phatmike]

It probably very much depends on the market you are working in.

Which pivot points are you talking about? The original ones, as described by Livermore and other old traders (which are basically just new maximums as the price goes north), or these fancy modern (H+l+C)/3-derived ones, which in my opinion have nothing to do with reality...

Well, I was looking at the fancy newer ones a little while ago but realised they didn’t really correlate, I then tried using an average of all the popular methods which seemed to result better. A couple of days ago I read something on the homepage of this site about using the highs and lows of the last to periods as support and resistance. I looked at using this on the Dow and through looking at past data it seems to fit well and makes logical sense. The difficulty I’m having is choosing a good indicator to confirm entering a trade when the price crosses one of the resistance/support levels. Basically I’m not too keen on using MAs, Macd, etc as the confirmations are too late. Maybe the answer is to just use the pivots and use some type of money management system for losses.

Any ideas?

 

[egro1egro]

Well, I was looking at the fancy newer ones a little while ago but realised they didn’t really correlate, I then tried using an average of all the popular methods which seemed to result better. A couple of days ago I read something on the homepage of this site about using the highs and lows of the last to periods as support and resistance. I looked at using this on the Dow and through looking at past data it seems to fit well and makes logical sense. The difficulty I’m having is choosing a good indicator to confirm entering a trade when the price crosses one of the resistance/support levels. Basically I’m not too keen on using MAs, Macd, etc as the confirmations are too late. Maybe the answer is to just use the pivots and use some type of money management system for losses.

Any ideas?

MA cannot possibly help you in this. They don't give any additional info.
There are many ways of trading breakouts and you have to find what fits best to your market, TF and personality.

Money Management - yes, definitely. If the price doesn't go your way - exit quickly, if it does - leave it to grow. If it went some way and starts to pull back - preserve your capital. All the usual advices, as you can see. Combine a set of rules around it and follow them. The set of rules should prevent big losses but shouldn't prevent big profits. In my view, time-stop is an absolute necessity in trading breakouts (if your position hasn't achieved any profit in a fixed amount of time - exit at market). When you figure out what set of entry rules you have you'll be able to find best filters easily (be it MACD or anything else).