# Pivots use or lose?

so I have been playing around a little bit. Trying to find some structure when every trade is at least at some level a gamble. But I have noticed that one of the ‘rules’ which is respected often is that of support and resistance levels. So properly identifying them is a major benefit. next to drawing them manually you can use fibs and pivots. My question to the veterans is on the pivots .

Pivot points do you use them? have you found that the pivot levels were respected as resistance and support often?

In my demoing it seems to me that S1 and R1 are usefull in ranging market but what of the other levels? and what of weekly and monthly pivots?

This is a common problem most folks who are new to trading experience: The search for the black and white answer.
It’s not a math equation to be solved.
A + B doesn’t always = C.
Sometimes A + B = C; Sometimes A + B = D, and sometimes A + B = E.

Support doesn’t always provide support. Resistance doesn’t always provide resistance.
It’s the price action context leading up to that level, and, whether or not a “good” risk-to-reward ratio exists.

[QUOTE=“Progeo;756071”]so I have been playing around a little bit. Trying to find some structure when every trade is at least at some level a gamble. But I have noticed that one of the ‘rules’ which is respected often is that of support and resistance levels. So properly identifying them is a major benefit. next to drawing them manually you can use fibs and pivots. My question to the veterans is on the pivots . Pivot points do you use them? have you found that the pivot levels were respected as resistance and support often? In my demoing it seems to me that S1 and R1 are usefull in ranging market but what of the other levels? and what of weekly and monthly pivots?[/QUOTE]

I use them with median lines. Work well.

No.

No more than any other horizontal line drawn randomly on a chart, and a good deal less than some non-randomly drawn ones indicating previous support and resistance.

At least tens of thousands of people believe in them (albeit not as many as believe in astrology), but I’ve never seen anything other than anecdotal, cherry-picked evidence that they “work” at all.

Of course, people tend to notice preferentially the times that they do appear to work and to interpret them that way (just as they do with their horoscopes), and that typically strengthens their beliefs. Michael Shermer explains why in great detail and describes a lot of research findings in detail, on related subjects of belief patterns, in his excellent book [I]Why People Believe Weird Things[/I] (very highly recommended - seriously).

All the independent, objective, academic studies I’ve ever seen on the specific subject of pivot points (and that’s actually quite a few, because I used to study these things in detail, at one time) have shown that they don’t “work” any better or mean any more than random lines.

But I’m not naive enough to imagine for a moment that my mentioning that is going to shake the confidence or beliefs that anyone else has about them. (In fact, if anything, according to Shermer and other authors who have studied this phenomenon, it’s probably even going to [I]strengthen[/I] their beliefs, so there’s that to be thankful for. ).

Lexy is right, Forex-unlmtd is right, everyone is right. works, doesnt work etc.

if you check on any given practice in trading, fibo pivots channels supports resistances lines whatever you will always find evidence that it doesnt work and youll find evidence that it works. hell theres even evidence that technical analysisi itself is pure immagined belive and actually doesnt work.

however, from my trading experience i have found that the yearly and monthly pivo points calculation is respected to some extend. maybe not enough to initiate trades but enough to find points where to close trades. everything below monthly and yearly is just crap that isnt been respected.

in any case, in my book i keep an eye on the monthly and yearly pivots but i dont trade forex at all and i cant judge onto forex pivots.

more often then not, ive seen a lot of changes around yearly and monthly pivot points, patterns formig around yearly resistances so taking the pivot points solely to initiate positions is definately wrong, but combining them with other resistance, support lines with chart patterns and candle stick formations can give you very good entree/exit points.

its like it always is in trading, there is only one thing that is respected without people knowing that they folow this simple rule: the self fullfiling prophecy. the more people belive in it the more it is likely to happen exactly as they believe it should.

Well pivot points can be proved to be working or not only by tests.
But…here is good article explain basic trendline analysis Trend Line, A Basic Analysis - Broker Arena
let us know if it helped you

Thanks I will definitely look in to that book. I already felt the same on the fib levels usually the strike price just cuts right through them. But it is always better to reject something with a proper statistical backing. Also here is some quantative research I found on pivots. it is on ETFs but the conclusion is the same

Pivot Points – Is It Profitable? | Quantified Strategies

I found some tests on the subject. The link is in the previous post. Your link does not go in to detail on the pivots. but trendlines + elliot waves do look like a much more respected ‘rule’ then the pivots. So I still really appreciate the advice.

I tried to read that article.

Pivots are critical to understanding the flow of price. Price flows in a wave over time.

Because we can find a high and a low, we have a middle. Using this logic, we use this to trade. Find stops etc…

The question isn’t “do they work” it should be "how do they work? "

Well, if it works for you, stick with it.

As for me, I don’t use them and I don’t find them useful. I’m all good with two to three lines. At east two of them are acting as support and/or resistance.

Pretty easy.