How I use pivot point clusters

[ezduzzit 10]

Well Soul, I frankly can stake no claim to having the final or definitive answer as between discretionary versus pure systematic trading.

 

Your comments about using market internals in your own systematic rules based discretionary trading exactly mirror those propounded by John Carter as he answered a question to a reader at his site about his always in the market, simple strategy for trading the mini Dow. He admitted he avoids the lunch hour periods and also utilizes market internals and order flow to further filter trades, thus turning what seemed to be a simple always in the market approach into a highly discretionary method.

 

Having watched many traders trade from free trials in their subscription based rooms, I have further noted they often operate outside the rules of their system or method. It often comes down to their very personal "feel" for what is happening in the market at a given moment, a feel that only comes from thousands of individual hours of trading such markets.

 

If someone is taking all signals, regardless of market condition then pure automation would seem advisable. However, I have yet to hear of an automated system that consistently results in an acceptable level of profits over time without excessive drawdowns that most would find unacceptable.

 

If such a system really did work and generated an acceptable level of profits that could be scaled, then I strongly doubt that anyone would ever be foolish enough to sell it. If they did, only the biggest players could ever afford it. Even so, any meaningful expansion of its use would soon cancel out any "edge" it might have initially conferred upon its first users.

 

My own limited experience suggests that discretionary trading of a very simple and well defined plan, taking note of market internals and order flow for additional filtering (in order to keep even a small "edge" in this game of probabilities) is probably the right way to go. I might further suggest that this simple plan will have to undergo fairly constant change if one is to remain successful in the markets over any extended period of time as they are always changing.

 

I happen to think that any "edge" that comes about through the use of someone else's off-the-shelf system that a trader has not personalized through hard work, discovery and adaptation is likely doomed to fail. I think it has always been so and is likely to remain that way for the forseeable future.

 

I am equally sure there are those who strongly disagree and feel that no daytrader can long succeed without removing their emotions from the trading arena through use of a pure systematic approach, whether automated or not. Frankly, live trading results over time with real money is the only thing that has ever mattered, regardless of any personal opinions I or others might be happy to toss out here for entertainment.

 

All in all, I think trading the markets will usually prove to be one of the hardest ways to "easy money" ever attempted.

 

Happy Trading!

[Soultrader 12]

I have taken the free trial of John Carter and Hubert. I found it interesting that both traders are successful in their methods but do not necessarily share the same style. Carter uses more indicators and pivots than Hubert. Hubert relies more on market internals and tape. I always wondered why both traders would not incorporate each others methodology into their style of trading. Hubert tends to explain market reversals based on market internals. But as a market profile and pivot based trader, my analysis shows that the reversal took place at a key pivot line.

 

I really love reading your posts ezduzzit Thanks for this.

 

I started off as a pivot based trader until I applied market profile into my trading which blew my mind. I always been interested in pivot point traders and when I ran into Carters methodology I found it useful since it fit my style of trading. Eventually I improved on market internals by studying Huberts methodology. I think a trader can gain an edge by applying different methodologies and taking what fits his style of trading.

 

All in all, I think trading the markets will usually prove to be one of the hardest ways to "easy money" ever attempted.

 

Amen.

[Maverick0325 10]

Soul,

 

Where can i find the floor trader pivots? I use ESignal.

[Soultrader 12]

Soul,

 

Where can i find the floor trader pivots? I use ESignal.

 

Not sure about esignal as I dont use it but you can use our pivot point calculator instead: http://www.traderslaboratory.com/forums/calc.html

[Maverick0325 10]

which 'style' of pivots are considered the FLOOR TRADER PIVOTS?

[Nick1984 10]

Classic calculation.

[Maverick0325 10]

Soul,

 

I too found pivots to be a very complimentary strategy to WHO i am a trader, but ive developed a small 'crush' (lol) on Mkt Profile ovber the past 6 months.

 

Had some questions for you:

 

1. What is the single biggest way to use it in your opinion? Signifying levels of S/R? Mkt direction/sentiment?

 

2. I use the value areas to mark levels of S/R and play those intraday in the YM. Question is the best values to use, and when to gather that data to make for an accurate S/R line. The self-fullfilling prophecy that is S/R in the YM means that i dont necessarily want the accurate data, but rather the data than is most widely used in my opinion. Pioneers dont last too long with that b/c they dont have anyone else to support that price point on the chart, thus not getting any S/R out of what you THINK is the correct value.

Do you....

A. Take VAH/POC/VAL (VA#'s) at the close of say Wednesday for Thursday's trading day and play those levels of S/R?

B. Take the VA#'s the morning OFF the day you wish to trade, ie, 9am in the morning on Thursday, when you are ultimately getting data that includes the overnight of that current day, 12am - 9am or so...

C. Use the 'developing value area' as it deveops throughout the day? Can this 'dev. VA#'s' be used as S/R on the chart as well, almost like 'buying the pullbacks to the 34EMA' in an up-trending market? Could you buy the pullbacks to the developing (key word) Value areas liek EMAs work? Do other trades do this enough for it to work?

D. What resources are available to me to do more research on the S/R levels that work best using MktProfile. I am relatively new to Mkt Profile so I would like to find a Blog, Post, etc that perhaps has some historical data as it pertains to this strategy.

 

Im anxious to learn more, thank you in advance!

[Soultrader 12]

Soul,

 

I too found pivots to be a very complimentary strategy to WHO i am a trader, but ive developed a small 'crush' (lol) on Mkt Profile ovber the past 6 months.

 

Had some questions for you:

 

1. What is the single biggest way to use it in your opinion? Signifying levels of S/R? Mkt direction/sentiment?

 

2. I use the value areas to mark levels of S/R and play those intraday in the YM. Question is the best values to use, and when to gather that data to make for an accurate S/R line. The self-fullfilling prophecy that is S/R in the YM means that i dont necessarily want the accurate data, but rather the data than is most widely used in my opinion. Pioneers dont last too long with that b/c they dont have anyone else to support that price point on the chart, thus not getting any S/R out of what you THINK is the correct value.

Do you....

A. Take VAH/POC/VAL (VA#'s) at the close of say Wednesday for Thursday's trading day and play those levels of S/R?

B. Take the VA#'s the morning OFF the day you wish to trade, ie, 9am in the morning on Thursday, when you are ultimately getting data that includes the overnight of that current day, 12am - 9am or so...

C. Use the 'developing value area' as it deveops throughout the day? Can this 'dev. VA#'s' be used as S/R on the chart as well, almost like 'buying the pullbacks to the 34EMA' in an up-trending market? Could you buy the pullbacks to the developing (key word) Value areas liek EMAs work? Do other trades do this enough for it to work?

D. What resources are available to me to do more research on the S/R levels that work best using MktProfile. I am relatively new to Mkt Profile so I would like to find a Blog, Post, etc that perhaps has some historical data as it pertains to this strategy.

 

Im anxious to learn more, thank you in advance!

 

 

Hi Maverick,

 

The threads and vidoes using pivots and value areas is a methodology and style I used to use for the YM. I have not kept track of this ever since I switched over to trading the Nikkei so do not know how effective they are now.

 

When I used to trade like this, pivot point and market profile clusters was my bread and butter. I had also combined volume and tape at these levels to determine whether price was going to hold or break. Combine that will market internals like the TRIN and TICK and you have a much better picture of price action.

 

I dont recommend using the value high and low pivots as S&R religiously. Yes, you take the previous day value area for todays trading. They should be used more as a reference point because price can easily hover back and forth within and out of value.

 

I never really used a developing profile besides knowing whether the POC was moving up or down. And yes, playing retracements back to value high/low pivots is a good strategy. (one of my own still for the Nikkei and I find it highly effective)

 

For resources, you should obtain market profile charting package and then study them until you are tired of seeing charts Its best to pour over them and understand how to read market profile charts fluently before applying them in your methodology. The last thing you want to do is to use a methodology with real money without completely understanding it. Are you able to determine what type of day we may have just by looking at the initial balance? Can you spot good trade locations based on market profile? etc... Grab a hold of Mind over Markets for starters. Then grab his second book and perhaps Steidlmayer's as well.

 

The only way for me to understand market profile was to pour over charts and recognize patterns. I no longer use certain techniques like I did for the YM with the Nikkei because of its characteristics. However, I apply the same concepts but work with different strategies around it.

 

The Value Area Rule for example is a classic strategy that should be studied. Also value area is 70% of price action. Which means the extremes on both the up/down side of the value area is only roughly 13-15%. Therefore buying breaks put the odds against you. Which is why I like to play rejection patterns using market profile as well.

 

[omullick 10]

Hey Soultrader,

 

thanks for your trading input. I just have a few questions, if you dont mind answering.

 

1.Do you use the pivot point strategy for intraday trading? Or is it longer term trading?

 

2. How do you decide what your PP, R1,S1, etc. are? Do you just use the formuals on wikipedia?

 

3. The last thing, how long do you usually stay in trades for?

 

I havent traded live yet, however, whenever i trade virtual i always have to get into the trade at 1 tick below market price (so when i enter the trade I'm already loosing by 1 tick). I usually stay in the trade for 10-15 minutes and try to profit 1-2 ticks. This strategy hasn't been working so well, even in virtual trading. And do you tick charts to enter/exit a trade or do you time charts?

 

Thanks for your help!