Does anyone use pivot points in their trading?
Back when I joined BabyPips (almost 4yrs ago), it cropped up quite a lot in here but I’ve not heard anything about them in long enough. Just wondering if any of the new folk have been using them.
I don’t know why it jumped to mind last night; I might slap them on a few charts & see how the PA stands out.
Yes I have a daily pivot on all my intraday charts. I do not base my actual trades on the levels but I like in general to trade when the price is moving away from the pivot line rather than towards it. The moves tend to be smoother and longer lasting. On the other hand, if the price is quite distant from the daily pivot line then a reverse signal can often result in a worthwhile retracement to the pivot.
The other lines (fibonnacci) on my pivots tend to act as good exit levels in thin and slow moving markets. Of course, these levels don’t mean anything when the market is doing some serious moving…
But, yes, I find the pivot very helpful. I should add that my trading is based on dual (or multiple) timeframes and I take the direction from the higher TF and wait for the price to be moving away from the pivot on the shorter TF in the same direction.
Does that sound as confusing to you as it does to me! 
[QUOTE=“Manxx;758207”]Does that sound as confusing to you as it does to me! :D[/QUOTE]
Don’t worry, I’m picking up what you’re putting down. This ain’t my first rodeo.
Pivots are not something that I’ve used but by all accounts, when you look at the mechanics etc behind them, they should (in theory) be pretty straight forward to trade. It was a big talking point with Newbies 4yrs ago but it’s gone quiet; now I’m sure that people will chime in that it’s because they’re useless & that’s why it’s fallen by the wayside but you get folk that question Fibonacci too. Take these indicators, apply some price action knowledge & again, in theory it should be easy enough to trade.
I think that I’ll try them out in a new strategy just as an experiment. It’s good to try new things & expand our knowledge & experiences.
Are you having much success using them, Manxx?
I use each pivot point on chart, i call it structure.
There is one concept I use. Once a structure has been broken it tends to be retested (and then resume its path).
See my thread 301 Moved Permanently
Hi Baz, I don’t actually use the daily Pivot as the basis for my entries, but more as a confirmation of direction. Sometimes the fibonnacci levels do provide good exit targets and help refine the choice of target/stop level.
I guess you could say that I am a ribbon trader if one has to label it. Here is an example of today’s three trades. It was clearly likely to be a very quiet day so I chose to work with the 5m chart. There have been 3 trades so far: 2 good trades away from the daily pivot with close stop levels above the ribbons and 1 more risky trade reversing back to the Pivot.
You can see that before the 3rd trade the price hung around the Pivot for quite some time before dropping away from it, but the actual timing of the trade entry was actually determined by the ribbons.
The bottom window is a basic RSI on the median price equivalent to a 13-period on a 15m chart which kind of reflects and confirms what’s happening with the ribbons (and often avoids a false move!).
So I guess you could say I use mainly just the Daily Pivot line - and only to give some overall background structure to the price direction rather than an actual trade signal.
Now that you have raised the topic, I am wondering whether it could be useful to compare the Daily pivot to the direction of the previous day’s bar even on short timeframes. I.e. if the previous day was an up day then when the short term chart is trading up there might be a stronger move as it is extending the previous day’s sentiment (and vice versa). I haven’t looked at that before so…
I have been experimenting developing a system using Daily Pivot Points. I got the idea from a thread on another forex forum (WWI). The original system posted was modified over time and I did not even finish reading the whole thread. I took the original system and have made my own modifications.
I have been live trading my system for only 3 weeks using very small position sizes. I was planning on trading it for at least 2 to 3 months before opening a thread if the system proved to be successful. But since this thread opened up and Baz is planning to try his own experiment, I though I would jump in. Maybe we can get good ideas from each other and this thread and develop something good.
I am a bit busy at the moment. I will post details on the system and the results to date later today.
That sounds like a plan, Yohec, & two heads are better than one.
Let’s do this, let’s bring pivots back to the mainstream!
[QUOTE=“yohec;758247”] I have been experimenting developing a system using Daily Pivot Points. I got the idea from a thread on another forex forum (WWI). The original system posted was modified over time and I did not even finish reading the whole thread. I took the original system and have made my own modifications. I have been live trading my system for only 3 weeks using very small position sizes. I was planning on trading it for at least 2 to 3 months before opening a thread if the system proved to be successful. But since this thread opened up and Baz is planning to try his own experiment, I though I would jump in. Maybe we can get good ideas from each other and this thread and develop something good. I am a bit busy at the moment. I will post details on the system and the results to date later today.[/QUOTE]
Here is a video that describes pivots and the use of Median lines. The ML helps with understanding where price is likely to go. Because price fluctuates, you can use the pivot to provide a logical stop and profit target.
I got the idea to this system on the forex forum WWI. That thread started in 2012 and has seen very little activity since early 2015. The original poster’s screen name is tutmosis. I’m not going to post a link to that thread. If anybody is interested in the original, go to the Worlwide Invest forum and search for “tutmosis”.
Following are the basic rules for the original idea using Daily Pivot Points.
That is it. The OP claimed that he made 400 to 500 pips per month using this system. Later on in that thread some modifications were made to the system but I did not read all of the posts. I just stared trading the original system and making my own modifications on the fly.
On my next post I’ll detail the rules that I use.
I’ve seen that before but never used it. It is also called the Pitchfork. Do you use it in your trading?
Following are my trading rules for the Pivot Point system. I did not backtest this strategy.
Direction of trend is taken from the Daily chart. I draw the 20 EMA and 50 EMA in the daily chart. If 20 is above 50 then it is considered uptrend. If 20 is below 50 then it is downtrend.
For a long: Entry at S1 plus 3 pips. For a short: Entry at R1 minus 3 pips. I put the extra 3 pips because I missed a couple of entries by a couple of pips.
Take Profit: For a long, TP is halfway between the pivot point and R1. For a short, TP is halfway between the pivot point and S1. I did this because I was having a number of trades the go into profit but don’t reach R1 or S1. I know it reduces the R/R but I was hoping the increased Win % will compensate.
Stop Loss is 5 pips above R2 for a short and 5 pips below S2 for a long.
I place all my entry orders shortly after the New York close.
I had a winning trade this morning on USD/CHF for 43 pips. This chart might help explain the entry and exit.
[QUOTE=“yohec;758283”] I’ve seen that before but never used it. It is also called the Pitchfork. Do you use it in your trading?[/QUOTE]
Yes. Along with marking out pivots (highs/lows) it’s very helpful when forecasting Profit targets/managing my trades.
Some details on how I trade the system:
I trade 10 pairs; AUD/USD, EUR/GBP, EUR/JPY, EUR/USD, GBP/JPY, GBP/USD, NZD/USD, USD/CAD, USD/CHF, USD/JPY. I have no specific reasons for choosing these pairs.
For each pair I look at the Daily chart and decide if the trend is up or down. If trend is up, I place a Buy Stop order at S1 plus 3 pips. If trend is down I place a Sell Stop order at R1 less 3 pips. Orders are placed after the New York close.
Stop Loss: For a Long, SL is placed at S2 less 5 pips. For a Short, SL is placed at R1 plus 5 pips.
Take Profit: For a Long, TP is halfway between Pivot Point and R1. For a Short, TP is halfway between Pivot Point and S1.
If a Buy Stop or Sell Stop order has not filled by the end of the London close, I cancel the order.
If an active trade has not reached SL or TP by New York close, the trade is closed manually.
The following chart gives a visual explanation for a successful short trade:
My results for the past week were as follows:
Orders placed: 50 (10 pairs x 5 days)
Orders filled: 15
Trades hit TP: 4 for +166 pips
Trades hit SL: 3 for -130 pips
Trades closed manually: 8 for +62 pips
Total weekly profit: +98 pips
This is just the first week that I have traded the system following the rules exactly. I have no expectations for future performance. I will continue to trade the system and see how it goes.
[QUOTE=“yohec;758377”]My results for the past week were as follows: Orders placed: 50 (10 pairs x 5 days) Orders filled: 15 Trades hit TP: 4 for +166 pips Trades hit SL: 3 for -130 pips Trades closed manually: 8 for +62 pips Total weekly profit: +98 pips This is just the first week that I have traded the system following the rules exactly. I have no expectations for future performance. I will continue to trade the system and see how it goes.[/QUOTE]
Obviously it’s early days for the systems & thus far it has proved to be profitable. My issue is that it seems like an awful lot of work for what appears to be approx. 2R. You’ve had to apply pivots to the charts, work out your entry, stop & take-profit, calculate your position size & place 50 orders. It seems like an excessive amount of work for banking 2R with only 30% of the orders actually being filled. It just doesn’t appear efficient. That said, profit is profit & you’re account is up so it can’t be knocked in that sense.
You are obviously using a set & forget approach to your use of pivots, I’m planning the opposite: apply them to the charts & then keep an eye on price through out the day. My thoughts are to pull up maybe 4 pairs (not decided on them yet) & use a similar approach to your filtering for direction. Look at the higher timeframe for direction & trade with the trend so only looking for a long in a bullish market or a short in a bearish market. I hope to then look a lower timeframe & trade pin-bars/engulfing bars or some form of PA from level to level eg. in a bullish market trade from S1 up to R1 or R2. By doing this, I expect to be able to use quite a small stop so one individual trade should hopefully return multiple R. I’m intrigued to see how confluence works if, say S1 ties in at the same level as the 20EMA & how price reacts from there.
Unfortunately I’ve got a busy week ahead of me so I’m not going to be able to do much until next week but I’ll dip in & out as much as I can & report back.
Good luck to all for this week.
It is not really that much work. My charts automatically generate the new pivot points after the New York close. It’s just a matter of looking where the lines are and doing a quick mental calculation to add 3 pips for the entry and take off 5 pips for the SL. For TP I just eyeball the halfway point between PP and S1 or R1. Since I’m trading small position I don’t calculate position size, so for now I just use the same on all.
It takes me about 30 to 40 minutes to enter all 10 trades. Since almost all orders won’t fill until after the London open, I have a few hours to place all of my trades.
That is exactly what I’m doing. I was just looking for a simple system that does not require a lot of analysis and time.
I just started doing this out of curiosity. I mainly trade off daily and weekly charts so I have free time for experimentation. If I can make 200 pips per months using this system I will continue. If it starts looking like a low profitability system I’ll drop it quickly.
My results for the past week (April 11 - 15) were as follows:
Orders placed: 50 (10 pairs x 5 days)
Orders filled: 21
Trades hit TP: 4 for +199 pips
Trades hit SL: 7 for -316 pips
Trades closed manually: 10 for +140 pips
Total weekly profit: +22 pips
this weekend ive been checking onto maryo cayro trades since i had some time. unfortunately as far as i know his english doesnt really allow him to explain his trading style so i checked if i can see what he is doing. and i saw that he is a pivot point trader. he is using a combination of last week plus actual week and the monthly pivot points to determine good entree and exit points.
so if you need some evidence that pivot points work you can check his trades, from what ive seen he is doing pretty good in profits.
too bad he cant comment on it here on englisch. perhaps some arabic speaking member can ask him
