Wilder's Trend Balance Point System (TBPS) and Pivot Points Revisited

Hope you like the title. It’s tongue in cheek and right up there with everybody else’s notion that their’s is the right way and the only way to trade pivots. So thought we’d just go with the flow!!! LOL!!!

We’re going to nail these things now once and for all right!!!

My initial musings to follow.




First off let me make this clear to anybody that may be following my antics:

This is not by any means a detraction from my proven trading system or methodology. The said system, however, really only requires me to spend around a half hour per day just before the close (by close I mean the closing of the NYSE) in order to monitor and maintain positions and act on signals. As a result: I have an inordinate amount of time on my hands during the day which, at the moment, is largely spent simply staring at charts. Boring as this may be: it has caused me to observe the behavior of price at certain levels during the trading day and with an almost 99% certainty I can tell, even with a totally clean chart in front of me, that those certain levels at which price exhibits a certain behavior is always when price has reached some or the other pivot level. I have personally not been able to turn a profit from this knowledge in spite of seeing this scenario playing out on a daily basis. And this is the reason for this thread. I believe that my time could be far better spent during the trading day profiting from this price behavior even if such profits are smaller than that of my proven trading system or methodology but possibly on a more frequent basis.

Now… My issues with pivots!!! LOL!!!

I have seen so many pivot point trading systems that I’ve probably forgotten some already. I’ve seen so many variations of pivot point calculations and even coded them from time to time. Which is best. Which is profitable. Which is a waste of time. I don’t have the answer. And that’s why we’re here.

One example of a pivot point trading system if I may:

John F. Carter has his version of pivot plays detailed in both of his books. They both seem to start out fairly alright. But as I have delved deeper into these plays: I end up with more unknowns and questions than answers. Drawing the actual pivots is not an issue. He uses the standard floor pivot formula. But then things get complicated. The question is: what to do and how to act when a pivot level is reached. And here is where his play, for example, becomes subjective. He suggests looking at pre-market volume on the S&P E-mini Futures Contracts (sorry FOREX traders). The number of contracts being traded, or lack thereof, will (apparently) dictate as to whether it’s going to be a trending day or a sideways day and how price will, in all probability, react when a pivot level is reached. Assuming you even have this information (which costs money and which I have spent a fair amount of $$$ on in the past I might add) I feel this is subjective. For one thing: the number of contracts being traded at the time of his writing those books I do not believe is applicable in 2019. The figure of 25 000 contracts (above or below) comes to mind here. But that was years ago. So while that may have worked for him back then: that figure may now be 50 000. Who knows. In addition: his stops are placed at or around certain fixed intervals (it will differ depending on the price of the instrument). Let’s say that, back then, 20 points on the Dow was his level. 20 Points on the Dow nowadays is nothing. Volatility in the markets is different. It’s ever changing anyway. I guess my point is: surely there must be a better way to mathematically (and dare I say dynamically) ascertain your stop levels. And this is just ONE pivot play that I have studied. There are dozens. I use this purely as an example.

Now back to the current day and my observations:

Price ALWAYS stops and pauses at some or the other pivot level. On my trading platform I (unfortunately) only have standard floor pivots with the levels S3, S2, S1, P, R1, R2, R3. I don’t have the mid points. And cannot add them either. Not the end of the world as these things can be manually calculated after the close and before the beginning of the next trading day (and I’m prepared to do that if required). In spite of this possible and perceived shortcoming: price mostly hits one of these levels and then hangs around (the exception being one of THOSE days where there’s been some or the other issue and it just barrels through the pivots without even thinking about it but these don’t happen too often). Now the problem: at what point and based on what notion does one decide to go long or short??? And once that’s decided: where do you place your stops??? I’ve seen so many ideas on this but in practice, for me anyway, they don’t appear to stack up. Not consistently anyway. Only thing I’m almost 100% sure of (and most any pivot trader will confirm): if price ever trades to R3 or S3 it’s prudent to fade the move as that is an extreme move. But here again: I’ve also seen talk of R2 or S2 being known as the “dead high” or “dead low” of the day. This I’ve not really seen holding (not lately anyway).

Now let it also be said here that my own personal experience with trading pivots has not been stellar at all. Each and every time I’ve attempted this: I’ve always fallen into the trap of moving my stops when I see that they’re about to be taken out (usually to the next pivot level or whatever). And then move them again. End result: a far greater loss than my original 2% aspiration. That’s been my usual modus operandi when it comes to pivots. I guess what I’m saying is that I don’t take lightly to stops being taken out (and if the truth be told: it’s probably why I do so well with my, let’s call it “main”, trading system i.e. no stops, no frustration, and therefore no encouragement to do stupid things or revenge trade) (in short my main trading system suits who I am). All of this being said: I realize that there’s going to have to be some more IRONCLAD discipline learned here by myself. I’m prepared to try. I really do believe in these things. Price just reacts to them with far too great accuracy and frequency for them to not be valid. We can obviously discuss the history and background of pivots of course but only if it’s relevant (anybody wishing to trade these things should at least know what they are and why they work). Aside from anything else: eve if they’re not magical numbers based on mathematical formulae they certainly are watched by any equities or commodities trader worth their salt (even if they’re not actively trading them) so they become a self fulfilling prophecy to a large degree.

So there you have it folks.

The floor is yours.



Look for pivot levels which line up with other things like prior days highs and lows, fib retracement levels, initial balance, Volume Point of Control (VPOC) etc. You’ll get a better reaction/rejection of those levels. I’ve found S3 and R3 (using camarilla pivots) to be good areas to focus on intraday, it’s possible to trade from S3 to R3, a fairly substantial move for an intraday trader. The central pivots width can also be a clue whether it’s going to be a sideways day or a breakout day, if wide probably sideways but if narrow there’s going to be a breakout on that day or the next.


See. This is where things go sideways for me.

Now we’re introducing a whole host of other things into the mix e.g. fibs., initial balance (whatever the hell that is), volume point of control (whatever the hell that is), and the etc. part.

“Better reaction.rejection”??? Define “better”.

Beg to disagree but S3 and R3 and not normal levels to be reached (and I don’t think there’s that much of a difference between the equivalent Camarilla levels either).

“Width” and “clue” and “probably”???

Please bear one thing in mind here:

Pivots were calculated by floor traders using price. Nothing more. They didn’t (don’t) have fibs. and whatever else are being introduced into the mix here. They would probably have volume from the ticker as well. That’s about it.

Oh and one thing I’d like to add here:

I’m aware that there’s probably at least a few other threads on this topic. The reason I’ve not read them or gone through them is because the intention here is to strip this down to basics and maybe come up with something simple and fresh (if that’s at all even possible).



Price frequently reaches S3 and R3 intraday. I found that looking for confluence levels makes sense. If pivot traders are buying at S3, and it’s a fib level fib traders are buying there, and so on… You’ll see more traders defending that price.

Initial balance is the high and low price of the price hour or two hours depending on your preference of the session.

My point is you can combine pivots with whatever else you want and if you find confluence you’ll have more traders using other styles on your side. Just from my experience.

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Dunno which charts you’re watching!!! LOL!!! R3 and S3 on mine only get hammered when we have these huge days (although these have been more frequent in the last week or two I must say).

I see your point re: combining pivots with other things. And I suppose combining with fibs. makes sense. Not really what I had in mind though. To begin with: not sure how much faith and trust I put in fibs. Second: I’m no good at drawing them. And third: much as I like your charts (and the colors) the last thing I want to end with are a gazillion indicators on a chart (and then end up getting confused because they’re all telling me something different).

Notwithstanding any other input here I think the best thing to do actually is for me to select an ETF and actually sit and watch this stuff on, say, a 15-min or 5-min chart for the next week and see what actually happens in practice. Maybe even take a chance and trade with the minimum possible units and see what I can do. Maybe then my questions on this thread will not be so broad based and be more specific.

What I know:

Price will stop at one or the other pivot level. It usually hangs around there for a while and then goes either up or down. So what is happening during the time it is hanging around i.e. who is looking at what and then deciding whether to buy or sell and thus moving price. This on normal days i.e. those days where nothing goes anywhere (which is where markets spend most of their time). Not talking about those days that have conviction in their moves (although I doubt they’re any easier to trade i.e. still wouldn’t know where to get in and in which direction).

Have put a lot of thought into this during the course of the day today I must say though. Welles Wilder actually developed a trading system based on this (although he doesn’t refer to it as such and makes no mention of pivots I ended up analyzing the system some years ago and it is nothing other than pivots). May be worth a look again. This again one of those trading systems that somebody else tested with an EA and said it wasn’t profitable so it got dumped without even trying it. Gut feel then as now: not convinced. With his system entry, stops, and when to hold and for how long are very clearly defined (and no other indicators or anything else are required i.e. pure price) (pure pivots).

Watched a lot of YouTube videos on the topic as well today. Meh. Same old same old. Not convincing.



15m and 1H charts. I know it’s not your thing. Just speaking my observations from the past year and a half trading pivots. Look for confluence, those areas provide much better entries and exits. I don’t mean to say fibs, IB, previous daily highs and lows, etc are the only way to go. Whatever indicators you are used to using, confluence will add conviction because other guys who trade using those styles will get into the trade as well.

Not my thing no. But talking about using daily pivots and then seeing what’s going on on those short time frames. That’s what I’ve been watching. As soon as price stalls while I’m sitting staring aimlessly into space (chart) then I drill down and watch the bars on those shorter time frames. That’s where I see price bobbing up and down for maybe short periods usually right around whatever pivot level it’s trading at. And then something makes it move from there. Now I don’t know if it’s some type of possible candlestick to look for or pattern of close or something. That’s what I’m hoping we’re gonna discover here.

One thing I have noticed pretty often:

Let’s say price trades to S1 for example. It may trade just slightly through S1. Then it bobs around there for a few 15-min or 5-min bars. It may make a small new low. Then it turns. What I’ve noticed is that it sometimes turns and closes above S1. And from there it then will trade to the pivot (and so on and so forth). So seems to me one would wait for this setup, place your stop just below the low I was talking about, and set your TP at the pivot (or just inside it). On this basis you have your SL and TP set and it’s easy to calculate your position size obviously. But this is just one thing I’ve sort of noticed. And it’s by no means foolproof nor a hard and fast rule. But it’s this type of thing I’m looking for. Maybe one has to wait for a low to be formed just under the level, then maybe another low but maybe slightly higher, thus forming a sort of double-bottom, and then take the trade. See where I’m trying to go with this??? In other words: I’m thinking that there may be a pattern or series of patterns to look for and that will tell you when to get in the trade, where to place your stops, and the rest. Purely price based.

Wilder’s system places wide stops i.e. you just buy at S1 (for example) and if the order is executed you set your stop at S2 (or S2 buy and S3 stop). That type of thing. But sometimes those stops are so wide that your position size makes it not even worth taking the trade. But at least those stops don’t get gunned all of the time. And this is a possible drawback of what I’m getting at and even good 'ol John F. Carter there. Everybody knows where the logical place is to place your stops i.e. where most traders will be placing their stops. Stop placement on these things are key I think. On the few trades I have indeed tried over the years (and assuming I’ve not moved the stops like an idiot): most all of the time I’ve gotten in at the level, then placed a stop, the stop has been gunned, and then price has traded to what WOULD have been my TP. That’s happened with just about every attempt I’ve made with pivots in prior years of course I must add. Have not bothered with them much in the last few years. Maybe one or two trades, stopped out, and then decided screw it. That type of thing. But as you know: be real nice to make something more often even if not big amounts i.e. every little bit helps now. Not trying to hit home runs here (that’s what my main system is for!!! LOL!!!).




Didn’t realize I had so many ETFs at my disposal until I looked now. Nice. Only been trading the futures. Hmmmnnn… Nice. Anyone for coffee, wheat, soybeans, wheat, pork bellies??? LOL!!! On a serious note: have the SPY, GLD, and Russell 2000, and Dow (iShares ETFs). Also an oil ETF (looks like it’s Brent Crude).


Just spent some time quickly looking over some charts with all of the daily pivots plotted historically. Makes me nervous. Not seeing any pattern that immediately jumps out at me. Looks pretty haphazard to me. Matter of fact and in just looking at these ETFs: trading the opening gap appears to be far more reliable. Tried that before with mixed success (although will admit I didn’t really know what I was doing back then but sure do understand this now after all of this time). Maybe something else to look at (except you FOREX lot only have gaps on Mondays).

Yeh listen up.

Let’s see what happens tomorrow. But I have to say that at this point I’m leaning toward not going any further with this and possibly even asking to have this thread deleted as its title may be misleading.

There’s no point in messing around with something unfamiliar and that just doesn’t look or feel right. Not for me anyway. Also no point in making money with one system and losing it on another. Even although one can manage risk with ease with this type of thing: those little 1% and 2% losses can add up real quick. It would only take a few losses to negate last weeks profits. Nah.

So price stops at these levels during the day. Good for price. Not seeing a way to trade this with any confidence. Can only see the merit of using these levels to take profit (as I did on Friday). Maybe better left to the pros. and floor traders or to somebody who has been doing this for at least five years as I’ve been doing with my system.

Sorry. But that’s my take for now. Will sleep on it. In spite of my initial enthusiasm: maybe I’m now just too old (or have wised up just a tad???) to learn (or try to learn) new tricks.



I don’t think that I have anything much to offer here at the present time.

I only use the Pivot line itself and not any of the S/R lines. And I only use that as a kind of broad indication of what the current price is doing, i.e. is the underlying trend continuing/retracing or consolidating.

I used to carry the daily Pivot line but some time ago I changed to the Weekly Pivot line. So the same horizontal line is there throughout the current week and is the same (of course) on every TF.

If price is moving away from that line then it is either continuing the existing trend (from previous week or possibly before) or is retracing /correcting. On the other hand, if current price is moving back towards that weekly Pivot then it is probably not doing anything other than consolidating or drifting waiting for new impetus.

I generally find that taking a signal from my own method away from the Pivot is more likely to go further and more smoothly than if the signal is going back towards the Pivot, in which case the moves can be more erratic, jumpy and shorter in duration.

I tend to ignore signals going towards the Pivot line unless they start from a fair distance away from it.

And that is about all I do with it! :frowning:

But…having said that, I have been looking at one of the Pivot options on my platform, including its S1-4 and R1-4 and it seems to be offering some interesting benefits for day-trading on Oil and SP500. It is not one of the more common Pivot methods and the only reason I first looked at it was because of my own laziness! :smiley: The Pivot line is only (H+L)/2, i.e. the previous week’s mid-price and the R3 and S3 are the previous week’s high and low values (which I watch and this saves me having to draw it!).

R1 and R2 and S1and S2 are the 0,382 and 0,618 steps between the mid line and high/low. R4 and S4 and then one step beyond the previous week’s high/low (R3/S3), at the 1,272 level.

When I apply this and my own method to a 30min/15min TF then it seems to provide an interesting “trellis” of levels for entries/targets/reversals/stops. Since my own method and style nowadays is geared more to swing trading on 1-3 days, I am interested in looking at this as an intraday trade for the US session - which happens to suit my timezone from 15.00-24.00.

But this is still a total prototype trial and I will report more here if it seems to be producing anything worthwhile.

Apart from that, I don’t think I have any new, fresh growth to add to the old branches…


Welcome home (back)!!! LOL!!! Hope you had a good weekend.

Interesting indicator you detail there. Why do those numbers look like fib. numbers to me??? (Could be wrong).

That’s what I was looking for too i.e. something to trade intraday on the S&P 500 (probably) as my trades also last for days. But when I was looking at those charts yesterday and last night I could actually feel the anxiety growing from within (when I traced trades through based on what I would have done had I taken those trades) with every stop that got taken out. There’s no way I can question the merits of pivots let’s face it especially given that I’ve been banging on about the fact that I KNOW that price has hit some or the other pivot level when it stalls i.e. see it every day all day. Could be that it’s just not something that I’d be good at trading (mentally, physically, psychologically).

But I’d nevertheless be pretty keen to see if you come up with something.



Yes they are fib retracements. it is called (on my platform) FIBR Pivot. It is not the same as the normal FIB Pivot.

To be honest, I am not a fan of fib numbers, either. Nor any other mathematically calculated levels. I believe it is total nonsense to think that the market moves according to some “natural laws or ratios”. In fact we tend too readily to apply some magical qualities to all kinds of lines. E.g. Calling moving averages “Dynamic support/resistance”. As if the market could be constrained by some line on a chart! :sweat_smile::sweat_smile:

The market is driven by concrete and real transactions in the underlying product whether it is forex or rubber or oil or shares or whatever.The only impact charting has on price is where it concentrates a large quantity of interest at certain points and there is a large proportion of speculative traders. And that only happens because we all tend to look at the same things and some things become more famous than others, like 200 SMA MA’s and S/R lines. This has the tendency of producing a short-term self-fulfilment effect if the underlying actual supply/demand is not overpowering at that time.

But in this case, from a day-trading perspective that does not matter because the timescale is so short (e.g. 1H - 15m) and the space between the lines is relatively narrow and it really doesn’t matter if price over/undershoots by a little.

Here is a 30min chart for SP500 for last week giving a reasonable trade each day (not just NY time) either closing on the next pivot up or down or at end of day. I have a simple method that I overlaid on this but I won’t show that yet until I have tried this out a bit. The rectangles are the Asia sessions and excluded. Although it is a 30 min chart it does not mean one has to stare at it every 30mins because that is only used for the entries, after that it is a “set and forget” with a target line and a stop level (e.g. previous swing hi/lo).

As you see, the fib lines are by no means accurate boundaries to movement but as long as it reached the next line then a profit is made - and sometimes, according to the method overlay, it may be possible to be a little more aggressive and go for two lines - e.g. back to the core Pivot line! :slight_smile:

This seemed to offer some potential on SP500 and USOil but looked horrible on the currency pairs that I briefly looked at!! :scream:

But I will do this next week with some small positions and see how it looks in reality and if there is any concrete potential here!


Tell what’s interesting:

I agree 100% with all that you’ve said. Including pivots (being a mathematical formula). Only reason they work (as with most all other stuff of this nature) is because there’s so many that watch then and trade them is all. In and of themselves they mean nothing.

Chat is interesting.

Seems to me that if you had to place your stops at the PREVIOUS swing high or PREVIOUS swing low prior to taking the trades then they never get taken out (well not never i.e. on this chart but you know what I mean). Or am I not reading it right??? In some cases the stops look far away so it would impact on the size of your trade. Rather that and make some money that lose 1% or 2% every other minute.

BUT: that’s a 30-minute chart so when and on what basis are those lines drawn and calculated???



The pivot lines are all based on the previous week’s high/low. They don’t change all week.
Naturally, when the market moves substantially then it will be beyond all the levels! :smiley: but this is maybe an approach for during those consolidating periods - which i think are quite many.
But, like i said, this is a prototype with zero record so far! :joy: but i will report on how it looks next week.

WEEKLY. OK. Got it. Makes sense.

Again: Pretty darn interesting.

Just thinking maybe to plot WEEKLY pivots (using the standard floor pivots that I am able to use) and see what that looks like.

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IF you do not have access to a FIBR Pivot, these are the formulas from the code. Very easy to put into a spreadsheet at start of week! :smiley: (as you can see, R3 and S3 are just the high and low from prev week)

But I emphasise once again (especially to anyone else that happens to be reading this) this is a brand new experiment and I do seriously think it will need some kind of filtering “method” overlay - otherwise this would already be traded by so many people, being so simple?

P= (ref.high[prev_H] + ref.low[prev_L]) / 2;

[R4] = L + (H - L) * fibr[R4]; fibr[R4] = 1.272;
[R3] = L + (H - L) * fibr[R3]; fibr[R3] = 1;
[R2] = L + (H - L) * fibr[R2]; fibr[R2] = 0.764;
[R1] = L + (H - L) * fibr[R1]; fibr[R1] = 0.618;

[S1] = L + (H - L) * fibr[S1]; fibr[S1] = 0.382;
[S2] = L + (H - L) * fibr[S2]; fibr[S2] = 0.236;
[S3] = L + (H - L) * fibr[S3]; fibr[S3] = 0;
[S4] = L + (H - L) * fibr[S4]; fibr[S4] = -0.272;


Thanks for that.

Must say I slapped weekly pivots (standard floor pivot formula) onto a 30-minute chart of the NASDAQ (first chart that popped up is the only reason for the NASDAQ). Must say: they sure do seem to hold nice. Found what APPEARED to be some nice trades on the chart all with a nice clearly defined stop levels. Only one would have been stopped out. TP subjective though. Cannot say that they’re short term intraday trades though i.e. also appear to last a few days (or you wait a good few days to get into the trade). But let’s see. Maybe we have some notes to compare next week.

Must say I’m kinda looking forward to the week (a rare occurrence for me of late so better make the most of it!!! LOL!!!).

You have a great trading week.

Chat soonest.



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You too, Dale! :slight_smile:

This is an interesting thought/prospective! Thinking about it now it makes sense! Thanks for posting that.

I have never used PPs. I will take a look at my s/r, s/d zones using a Fib and will see confluence at times. Agree with you guys that a line on a chart doesn’t dictate price but can help identify where substatial trasactions have moved the price in the past and may do so in the future (you may have said this and I missed it) this in the light of past performance…blah, blah, blah, future returns crap. :laughing: Again, I just play a trader on TV - I’m still a forex demo-god in real life.


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