Pivot Point Trading System Introduction Presented by Doug

  • Slides: 28
Download presentation
Pivot Point Trading System Introduction Presented by Doug Allen

Pivot Point Trading System Introduction Presented by Doug Allen

Presentation Outline • What are Pivot Points? • Why would you use a pivot

Presentation Outline • What are Pivot Points? • Why would you use a pivot point trading system? • When would you use the system? • How does a pivot trading system work? • Basic entry and exit signals using pivots points

What are Pivot Points? • “Potentially” key support and resistance levels • Available on

What are Pivot Points? • “Potentially” key support and resistance levels • Available on Prophet Charts and TOS Charts • Base pivot calculated by High + Low + Close ÷ 3 of prior period time frame • Support 1, 2, 3 and Resistance 1, 2, 3 levels are calculated off of the base pivot level • Available on multiple time frames: Daily, Weekly and Monthly > often coincide with Fib Levels

Why would you use a pivot point trading system? • The need for a

Why would you use a pivot point trading system? • The need for a system with clearly defined entries and exits • The need for a system with well defined targets • Having clearly defined targets makes it easier to calculate risk/reward ratio • Trading intraday using “Day” pivot levels offers an abundant amount of trades

Persons vs. Regular Pivots • Persons Pivots developed by John Persons • Persons attempts

Persons vs. Regular Pivots • Persons Pivots developed by John Persons • Persons attempts to simplify and focus only on probable levels (attempts to weed out excess) • Persons available only on TOS platform • Pivot Points available on TOS and Prophet • Find what works best for you

Pivots on TOS Platform

Pivots on TOS Platform

Persons Pivots on TOS

Persons Pivots on TOS

Pivots on Prophet Charts

Pivots on Prophet Charts

Pivot Time Frames • Daily Pivot Levels for Intraday Trading • Weekly Levels for

Pivot Time Frames • Daily Pivot Levels for Intraday Trading • Weekly Levels for Swing Trading • Monthly Levels for Longer Term Trading • Todays focus will be on Daily Pivot Levels

Daily Pivot Levels • Best for Intraday Trading (trends and reversals) • Can use

Daily Pivot Levels • Best for Intraday Trading (trends and reversals) • Can use 15 Minute Chart to determine trend • Can use 5 Minute Chart for entry / exit signals • Stronger when daily levels coincide with Weekly and/or Monthly pivot levels

Daily Levels for Intraday Trading 5 Minute bars, Daily Pivot Levels - best with

Daily Levels for Intraday Trading 5 Minute bars, Daily Pivot Levels - best with Regular Pivots

Weekly Levels for Swing Trading Daily Bars using Weekly Pivot Levels - best with

Weekly Levels for Swing Trading Daily Bars using Weekly Pivot Levels - best with Persons Pivots

Monthly Levels for Longer Term Trading Weekly bars with Monthly Pivot Levels - best

Monthly Levels for Longer Term Trading Weekly bars with Monthly Pivot Levels - best with Persons Pivots

Confluence of Time Frames • Confluence of pivots from multiple time frames can be

Confluence of Time Frames • Confluence of pivots from multiple time frames can be useful when looking for price targets or strong areas of support and resistance • Works on tops and bottoms • Professional traders are watching these levels too • Caveat: Like all other S and R levels, they don’t work all the time, but many times they do

Convergence of Time Frames

Convergence of Time Frames

Targets and Risk / Reward Simplified • Must have a target before calculating Risk/Reward

Targets and Risk / Reward Simplified • Must have a target before calculating Risk/Reward (must have stop level too) • Must have 3 to 1 reward to risk to enter trade • Target is next pivot level, but be optimistic that it can move much more so have a plan how you will scale out of partial and let some of the winner run • Focus on the target, let the trade work for you

Good Risk / Reward Example

Good Risk / Reward Example

Bad Risk / Reward Example

Bad Risk / Reward Example

When would you use the system? • Trending days are good • Highly volatile

When would you use the system? • Trending days are good • Highly volatile days are good - lots of bounces • Avoid doji days (mixed market internals) • Don’t force trades, let them come to you • Be aware of weekly and monthly pivot levels

Entry Signals - 5 Minute Chart • Key is patience to wait for good

Entry Signals - 5 Minute Chart • Key is patience to wait for good signals • Trade only in the direction of the 15 minute trend for best results • Buy at Support • Sell at Resistance • Pivot can act as support or resistance • Use longer term technicals to assist in direction

Entry Signals - 5 Minute Chart • Buy at High Close Doji (HCD) Once

Entry Signals - 5 Minute Chart • Buy at High Close Doji (HCD) Once a doji or bottoming candle has formed at the pivot level, wait for a candle to close completely above the trigger candle for entry • Sell at Low Close Doji (LCD) Once a dojo or topping candle has formed at the pivot level, wait for a candle to close completely below the trigger candle for entry • Confirm with 15 Minute Stochastics

High Close Doji (HCD)

High Close Doji (HCD)

Low Close Doji (LCD)

Low Close Doji (LCD)

Exit Signals - 5 Minute Chart • Once target is reached, exit when sell

Exit Signals - 5 Minute Chart • Once target is reached, exit when sell signal appears which would be a HCD or LCD at target • Alternatively, exit majority of the position at Target One and let the remaining position run incase the trade continues to work • Adjust stop to breakeven once Target One has been reached

Low Close Doji (LCD)

Low Close Doji (LCD)

Pre-Market Preparation • Identify the Pivot Level (available the day before) • Watch Futures

Pre-Market Preparation • Identify the Pivot Level (available the day before) • Watch Futures to find out where market is likely to open • If it opens near support, look for a bounce up • If it opens near resistance, look for a fade down

Summary • Pivots are great levels to build a system on • Your system

Summary • Pivots are great levels to build a system on • Your system will likely be unique to everyone else's, adjust as you see fit • Look for buy signals at support • Look for sell signals at resistance • When the system triggers a signal, act on it. • When the system says get out, get out!

Resources • Candlestick and Pivot Point Trading Triggers by John Persons • John Persons

Resources • Candlestick and Pivot Point Trading Triggers by John Persons • John Persons DVD • John Persons Website www. nationalfutures. com • www. mypivots. com