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Luke 5:31, 32 And Jesus answering said unto them, They that are whole need not a physician; but they that are sick. I came not to call the righteous, but sinners to repentance.

26 Aug 2019

SHAREMARKET--Why I love using Pivot points in daytrading--

Unlike other indicators, they are not lagging indicators, instead leading indicators.
b) They are static and remain at the same prices throughout the day at all time frames.
That means Nifty PP (pivot point) at 11100 and R1(R1 Pivot) at 11140, then on all time frame(3 min,5 min,15 min,1 hour etc.) it is same, it doesn’t change, unlike VWAP and other day trading indicators.
d) Many big institutes and HNIs use pivot points for their day trading, many big traders keep a watchful eye on daily pivot points, as they are considered to be key levels at the intraday timeframe.
e) Because so many people are looking at those levels, they almost become powerful support or resistance in day trading.
Some of the strategies commonly used in pivot points trading.
a) If price approaches a pivot point, and if price starts hesitating and consolidating at that pivot level and suddenly cracks in the opposite direction, you can take the trade in the direction it bounces.
b)But if the price consolidates around that pivot for a very long time and then breaks out with a big green candle, that means it’s a breakout.
c) One more way I use pivot is trading from one zone to another, if there is a breakout from one pivot, I go long for the target of next pivot and vice versa,keeping SL below the entry pivot.
Along with daily pivots, there are weekly pivots, monthly pivots and even yearly pivots, all these pivots are very important and can be plotted on the chart and can day trade effectively.
Along with these daily pivots, there is something called CPR (Central pivot range) which is equally powerful in day trading.
When there is a confluence of daily, weekly and monthly pivots it becomes much more powerful.
There are many other strategies which I developed over the period of time like, combining daily pivots with weekly & monthly pivots, combining pivots with moving averages, combining pivots with price action etc
Now it has been more than 2 years I am using Pivot Points, for me Pivot Points works very well in day trading, if someone wants to use it then it’s advised to do enough backtesting and then use it.
I backtested pivot points only on Nifty and Bank Nifty, so I don’t know how it works on Stocks or commodities, but I read in many trading books that Pivots works very well on any instruments or stocks provided it has good liquidity.
If anyone of you backtest it on stocks and come with your own observation then it will be a great help
(Whatever information I shared here is just an over view, to discuss entire pivot point trading method will take almost a Day)

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