FOREXHUSKY
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Another look at pivot
The daily pivot trading method has been around for a long time. It was
originally used as a simple arithmetical guideline to help floor
traders perform their daily monitoring and trading operation. The pivot
calculation set is very practical as it comes in a horizontal line format -
the same format which determines our profit or loss. In horizontal
format, charts get easier to be read and imagine in our head when we need
to monitor the market without watching it. In this minimal form, the
pivot is a deceptively simple but powerful and reliable tool to trade
with. However, it has several problems.
There seem to be multiple interpretations to use the pivot set - as
there are also several types of pivot calculations from the classic
7-point pivot to the very detailed 10-or-more-point complete with mid-area
support and resistance. There are also multiple methods to perform trades
using the pivot points. Some enters only with the bounces on support or
resistance points and some perform breakout entries on those points.
Anyhow, the fact that pivot has more than 1 line makes the whole system
to be more complicated than its original form. Watching the market
bounce or crosses 1 very thin line can be very frustrating, let alone 7 or
even 12 – especially when they’re very closely placed to each other! As
a mechanical discretion method, it's definitely not helpful - as market
may do the tango over them and leaves us completely baffled with our
trading decision.
Pivot should be returned to be viewed at as directional threshold to
market's movement. In this context, pivot is the final boundary for
market direction to expire and change. This boundary’s format should be as
simple as ONE horizontal line. After all, the term 'pivot' itself should
speaks for itself and not be distorted. If it's trading above the
threshold then we should logically accept (by globally accepted commonsense
premise) that price is trading upward - and the opposite, if below the
threshold. Trading along this universal concept will never go wrong.
Another problem with the single-price pivot output is the fact that
market is not exactly precise. In reality, market flutters, ranges, and
whips. The market is not always in nice small range - just like the ocean
isn't always calm. Therefore, when we compare the razor-thin 1-pip
precise pivot price compared to the market's movement - most of the time,
we'll have an extremely difficult time determining the market's
direction as it approaches and crosses the pivot.
To solve this issue, the thin pivot line can be expanded to accommodate
the market's flux in the form of a buffer zone. The pivot buffer zone
should be calculated to adapt to the latest market volatility as
breakout confirmation needs to be done by comparison toward the market's
fluctuation range. This way we can actually define/identify pivot crossing
easier and clearer. As the task of crossing identification is made
easier, so is the brain's logical procedure of determining market's true
movement. The result: easy and reliable trading technique with precise
entry & rigid risk control.
In addition to its basic trading functions, the straightforwardness of
the pivot principle can be applied further as a reliable tool to
track/monitor the market. As the pivot represents the market’s directional
threshold, the shifting behavior of these day-to-day thresholds can also
be interpreted as the condition in which the market is moving. Movement
is simplified into an easy-to-read format which is clearly legible in
intraday timeframe. The advantages: precision entry/risk control in
intraday timeframe and the convenience of being able to monitor bigger
movement from a relatively precise time scale.
The pivot alone (without the support and resistance) can be a very
powerful tool – if viewed and used properly. Add simple trading method,
precise entry & risk control, and market analysis capability and you will
have a remarkable instrument for trading the market.
Lets talk..... :cheesy:
The daily pivot trading method has been around for a long time. It was
originally used as a simple arithmetical guideline to help floor
traders perform their daily monitoring and trading operation. The pivot
calculation set is very practical as it comes in a horizontal line format -
the same format which determines our profit or loss. In horizontal
format, charts get easier to be read and imagine in our head when we need
to monitor the market without watching it. In this minimal form, the
pivot is a deceptively simple but powerful and reliable tool to trade
with. However, it has several problems.
There seem to be multiple interpretations to use the pivot set - as
there are also several types of pivot calculations from the classic
7-point pivot to the very detailed 10-or-more-point complete with mid-area
support and resistance. There are also multiple methods to perform trades
using the pivot points. Some enters only with the bounces on support or
resistance points and some perform breakout entries on those points.
Anyhow, the fact that pivot has more than 1 line makes the whole system
to be more complicated than its original form. Watching the market
bounce or crosses 1 very thin line can be very frustrating, let alone 7 or
even 12 – especially when they’re very closely placed to each other! As
a mechanical discretion method, it's definitely not helpful - as market
may do the tango over them and leaves us completely baffled with our
trading decision.
Pivot should be returned to be viewed at as directional threshold to
market's movement. In this context, pivot is the final boundary for
market direction to expire and change. This boundary’s format should be as
simple as ONE horizontal line. After all, the term 'pivot' itself should
speaks for itself and not be distorted. If it's trading above the
threshold then we should logically accept (by globally accepted commonsense
premise) that price is trading upward - and the opposite, if below the
threshold. Trading along this universal concept will never go wrong.
Another problem with the single-price pivot output is the fact that
market is not exactly precise. In reality, market flutters, ranges, and
whips. The market is not always in nice small range - just like the ocean
isn't always calm. Therefore, when we compare the razor-thin 1-pip
precise pivot price compared to the market's movement - most of the time,
we'll have an extremely difficult time determining the market's
direction as it approaches and crosses the pivot.
To solve this issue, the thin pivot line can be expanded to accommodate
the market's flux in the form of a buffer zone. The pivot buffer zone
should be calculated to adapt to the latest market volatility as
breakout confirmation needs to be done by comparison toward the market's
fluctuation range. This way we can actually define/identify pivot crossing
easier and clearer. As the task of crossing identification is made
easier, so is the brain's logical procedure of determining market's true
movement. The result: easy and reliable trading technique with precise
entry & rigid risk control.
In addition to its basic trading functions, the straightforwardness of
the pivot principle can be applied further as a reliable tool to
track/monitor the market. As the pivot represents the market’s directional
threshold, the shifting behavior of these day-to-day thresholds can also
be interpreted as the condition in which the market is moving. Movement
is simplified into an easy-to-read format which is clearly legible in
intraday timeframe. The advantages: precision entry/risk control in
intraday timeframe and the convenience of being able to monitor bigger
movement from a relatively precise time scale.
The pivot alone (without the support and resistance) can be a very
powerful tool – if viewed and used properly. Add simple trading method,
precise entry & risk control, and market analysis capability and you will
have a remarkable instrument for trading the market.
Lets talk..... :cheesy:
