Pivot Points

[tommog]

Hi,

There is a lot written about pivot points, how to enter a trade using them, how to calculate them etc. But there is very little written about an exit strategy for pivot points. I was wondering how people exit a trade that was opened from a pivot point indicator.
Some people suggest using the pivot point itself as a place to put the stop loss, but in fast moving markets, and especially after the breakout it can dip back below the pivot price briefly before moving off again so this would be too close. This is assuming your trade goes wrong, but what about if you get it right, do you sell after the first sign of a pull back after a breakout.
I'd be interested to know how you guys exit a pivot point trade

cheers

 

[bracke]

Hi,

There is a lot written about pivot points, how to enter a trade using them, how to calculate them etc. But there is very little written about an exit strategy for pivot points. I was wondering how people exit a trade that was opened from a pivot point indicator.
Some people suggest using the pivot point itself as a place to put the stop loss, but in fast moving markets, and especially after the breakout it can dip back below the pivot price briefly before moving off again so this would be too close. This is assuming your trade goes wrong, but what about if you get it right, do you sell after the first sign of a pull back after a breakout.
I'd be interested to know how you guys exit a pivot point trade

cheers

The resistance and support levels associated with the pivot point can be used to determine the exit point, as can plenty of other indicators.

Regards

bracke

 

[Newtron Bomb]

tommog

There are various ways of using pivots as you have already found out.

The best way imo to think of pivots is as support and resistance decision areas. In this way it gives you an area to watch the price action in. Remembering that price i king I would then look at the price bars to decide on a continuation or reversal at a watch area. A break of support or resistance is not always a good way to trade on its there own. The price still need to suggest a direction after SR has been reached or breached. Like with all indicators they are best used in conjunction with other tools.

HTH
NB

 

[tommog]

thank you for your replies.

I understand that Pivot Points are more effective when used with another indicator. What other indicators do you think compliment Pivot Points? I find that most indicators tend to show what has happened and don't give much of a firm base to make any predictions on future price movement.
Assuming the price has broken through a support/resistance level what is regarded as the best indicator to support that this isn't a false signal on an intraday chart?
I know, this is quite a subjective question as everyone probably has their own way of doing it, but i am hoping that someone can point me in the right direction.

Thank you

 

[TheBramble]

I'm no longer such a big fan of indicators, but without going into the Price & Volume only side of the spectrum, you could consider the following.

On a break through Resistance, if the price had been channelling, a lot of people take a rise above the breakout of just over half the channel width as a Long entry point. You do miss a large part of the move if you adopt this approach, but it also means you don't get whipsawed as often either.

Another strategy is to wait for a pull-back or 'test' of Resistance. When the price comes back to the R-line (which it often will for reasons we're not interested in right now) you go long from a bounce back up from that test point. If it does bounce of course.

Reverse applies for action around Support of course.

As for targets (a very wide subject area) if you are playing S/R you can set the channel width as a first target or work in some Fib levels if you prefer.

Personally (and I don't trade this way anymore, but FWIW) I used to set a first target at channel width, sell half on 1st target being hit and hold the rest until momentum (volumeXprice action) starts to flag (as in tire, not as in pennant!).

There will be as many disagree with what I've said as agree, but if it helps....

 

[tommog]

Bramble,

Thanks for your reply, i'd be interested to know what sort of techniques are available to a trader if they become "no longer fans of indicators", i have had a degree of success with indicators of various types but i can also see they have many flaws and would like to have a few more techniques in my arsenal.

You mention you are no longer such a big fan of indicators, which is interesting, i have read many threads on these boards of people that say price is their favorite indicator, but surely price needs to be compared to something to build up a picture of where its headed? I'd be interested to hear your thoughts.

cheers

 

[Newtron Bomb]

Pivot Points and price action

Yesterday was a good trading day I identified a range from the open of the trading session on 60 minute charts.

Pivot points support my observations of this range. The calc I use is available free on my site.
H = 1.7845
L = 1.7707
C = 1.7739
Ive market the two pivots as thick red lines teh thin red lines is the range projection. I also took a short @ 1.7890 after GS spoke where an importand resistance level was, there was also a pivot level there.

Once establishing a narrow range I used 5 minute charts. I traded the points 6 7 and 8 (9 was the exit for the third trade) marked on the chart.
I have also highlighted several other opportunities some for a loss but most for a profit

Pivots in conjunction with other tools ie other TA skills are a powerful combination.

Happy Trading
NB