fintrans

Hi, and thanks for all the input. I actually did reply to this thread a few days back but my message seems to have dissapeared (I think there was a problem with the server at some point earlier this week). Anyway - the main reason I wanted some clarity on pivot points was because, at the time, the EUR/USD had shot through all of its pivot levels and of course I was short at the time with no stops so I was trying to figure out if I could reasonably expect EUR/USD to return to one of the previous days pivot levels. I closed the position though and decided to stick to what I know (I don't usually trade forex pairs - not anymore anyway). Just as well I did because it's still sitting way above the levels where I decided to close my position! Having said that I normally (almost exculsively) trade the DAX using Bill Williams' Profitunity (Chaos) Trading System (and its various variations). For those of you not familiar with this system it relies on fractals for entry points (in one of the versions anyway). What I started to notice was that every single time a fractal entry point was reached the associated stop order would be triggered and the position would go into a 'tiny' profit situation and then the price would almost immediately retract and take out my stop (needless to say I ALWAYS use stops on the DAX as the DAX can take you out in a heartbeat if you're not careful). I wanted to find out why this is because it is not addressed by Bill Williams. What I found was (thanks to 'Mastering The Trade') that just about every single time the fractal was sitting at one of the key pivot levels. Coeincidence? Not likely. It just happens far too often and with too much predictability for it to be coeincidence. I mean to say - sometimes - the fractal signal is EXACTLY on the pivot point (not a few points either side but EXACTLY)! Of course this leaves me with a huge dilemma i.e. when I theoretically should, for example, be placing fractal sell orders (according to Bill Williams) I should be placing fractal buy orders (according to John F. Carter). I'm still trying to figure out a way to catch the pivot retractment AND the fractal a bit later on but still have not come up with an answer. I mean - 'you can't have your cake and eat it' - or can you??? Maybe someone could put some input in here. Let's say that at market open the price is between yesterdays pivot level and S1. I would invariably be getting a fractal sell signal at the same point as S1. The price moves down to S1, triggers my sell stop order, and then retracts. How would you play this taking the pivot points into account? The added problem is that at some point during the day / week the price in this example will invariably move through S1 turning the Profitunity entry into a profit. If I understand John F. Carter correctly you should wait for the price to go through the pivot point and then, depending on how far past the pivot it went, you should place a limit order order to catch the retractment if any. The problem for me with this is that the price mostly does not go through the pivot but hangs around for a while and then retracts so you are never sure whether or not it is actually going to keep going in one direction or retract! Another thing that is not addressed in the book: are pivot levels only applicable on a daily basis i.e. an instrument will trade between its daily pivots and pivot resistance and support levels BUT - on a monthly basis - should and instrument trade between its monthly pivots and pivot resistance and support levels - on a weekly basis - should an instrument trade between its weekly pivots and resistance and support levels - and so on and so forth? Regards, Dale.

Good morning, and thanks for the replies. It would appear that pivots play a key role in the way I trade. I trade mainly (almost exclusively) the DAX using the Profitunity (Chaos) Trading System by Bill Williams (for those of you not familiar with this system one of the things that it relies heavily on are fractals which basically indicate a change in direction and support and / or resistance). Anyway - I started to notice that every time a fractal was hit and the corresponding stop order was triggered the price would almost immediately retract and it could be days before the price then moved past the fractal position into a profit and this was getting to me. I started placing orders further away from the fractals but then you miss too much of a move. Having read John F. Carters book I decided to draw the pivot levels on my DAX charts last week and I could not believe my eyes at the time: every single time this happened it was at the exact point where a pivot line was drawn (give or take one DAX point - it is that accurate - and I went back weeks to check)! Anyway - having solved THAT problem - for some or the other reason - I was short on the EUR/USD on Friday - and I was really hoping that it would retrace to Friday's daily pivot level some time today (Monday) - but right now it's still moving up - so I've taken the loss - and will stick to what I know! All I can say is that thank goodness those were not DAX positions - the DAX can wipe you out in a heartbeat if you're not careful - but when it moves - you're in the $$$ (I ALWAYS use stops on the DAX)! What is not clear in the book is that if an instrument is expected to hit either its pivot point or R1/R2/S1/S2 on the daily chart - would it be a reasonable assumption to make that this would apply to the weekly and monthly charts as well i.e. on a weekly basis may hit the previous weeks pivot levels during the current week and on a monthly basis may hit the previous months pivot levels during the current month or are pivots only valid on a day to day basis? I have a hard time with fibo levels - I never know which points to take and I have read so much conflicting instruction as to where to start and where to stop - so the end result is that they end up being meaningless to me but I'll give it another bash. Put it this way - if I draw the pivots first then I can gauge which would be the right points to take for the fibo levels (although that's like 'putting the cart before the horse' as it were I would imagine)! Regards, Dale.

Hi folks: I need to start this question with a quote from John F. Carters' book 'Mastering the Trade': 'It is important to note that it is extremely rare for a stock index to hit its daily R3 or S3 levels. This is important to know because if a market rallies to R2 or sells off to S2, that usually ends up being the dead high or the dead low of the day'. Well - if anyone was watching EUR/USD on Friday you will note that it shot through (almost without stopping) the daily R1 and R2 and closed around the mid point between the weekly pivot value and the weekly R1 value (which just also happens to be the same value as the monthly pivot). My questions are: 1 - In a case like this which pivot point values would be key to watch in the next week (assuming that you are trading intraday)? What I mean to say is that in a case like this it would appear that the daily pivots are no longer valid. and 2 - The quote above specifically mentions stocks (which I mostly trade) but is it reasonable to expect the same 'rules' as it were to apply to forex pairs? and 3 - Do you think that the above i.e. pivot point trading also applies to commodities? (Hope you don't mind me asking these questions here - new to THESE forums - found them while searching for contact information for John F. Carter or his organisation). Regards, Dale.