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Study says pivots don't work?


This simple study says that pivot points don't work; they author tested 10 major currency pairs for 2006 to the present and found that the price was no more likely to revert back to the pivot point than any other number [url]http://www.myforexdot.org.uk/PivotPointAnalysis.html[/url].

If pivots work, can someone suggest something that can be back tested to show that they have some statistical significance?
Hi David,

I don't have an answer to your back-testing (at this time) because I'm fairly new to day-trading (1 yr) and very new to pivot points (PP) -a couple of weeks.

(I would imagine that if PP had no value then they would have passed away.)

From a free short video (27 Aug) at TTM he says:
"I don't see how people trade the currencies without PP"

He combines weekly pivot points with the Keltner bands (on 120min and 60 min charts) but not against his 'squeeze' indicator.
http://www.tradethemarkets.com/public/3781.cfm

It may be that PP are most valuably used with human judgment and so back-testing may not be the best way to examine your question.

Notice that he is trading the bands and finds extra strength if the weekly pivot points match the bands. Then he takes half profits at a PP in the middle of the band. His comment "look how well the markets respect the pivot points."

So for myself I am keeping an open mind and looking at PP as another possible tool in my arsenal that, with more experience, I will know when to apply them, and how to apply them, and other indicators and price action to confirm. As so many traders know of them and use them I feel I should be aware of where they are as well.

I hope it helps!




Guys, please don't play with this indicator stuff. It muddies up the screen.
I thought pivots were IT. They aren't. I thought MACD was IT. Not.
Price action is the only true language of the mkts.
If ya'll seriously wanna play with indicators, fine. I'm not saying your dumb. But if you want to seriously study the mkts, trend lines on price action will do it. And it doesn't take that long to learn.
I can, with intellectual honesty, and from the bottom of my heart, totally recommend Al Brooks book "Reading Price Action Bar by Bar".
Not an easy read, but an indepth study of simple 5 min bars on the ES, some stocks thrown in for good measure.
Very simple stuff.
www.brookspriceaction.com
Remember, Al was an Opthamologist. They study little things like rods and cones,retinas,corneas, etc. They're used to picking out the tiniest details that matter so much. I guess that's why Al is so good at what he does. He spent years doing surgery on eyeballs. That takes a steady hand and a VERY good eye.
I dont know Al, but I'd imagine a surgeon like him makes very few mistakes with a scalpel, or a chart and a trading platform.
This study was done a while back and published here Do Pivot Points Work?
Thanks Piperian for the Al Brooks stuff. I think you're entirely right about someone coming from the surgeon world, used to paying attention to the smallest minutiae, becoming very good at reading bars and price action.

I've found after reading through this forum for the last few days that Al is referenced quite a bit. The audios I've listened to and articles he's done are exceptional and are convincing me, pretty quickly I might add, to let go of the indicators cold turkey. Price action is where it's at.
quote:
Originally posted by catpurley

Thanks Piperian for the Al Brooks stuff. I think you're entirely right about someone coming from the surgeon world, used to paying attention to the smallest minutiae, becoming very good at reading bars and price action.

I've found after reading through this forum for the last few days that Al is referenced quite a bit. The audios I've listened to and articles he's done are exceptional and are convincing me, pretty quickly I might add, to let go of the indicators cold turkey. Price action is where it's at.

Thank you for not immediately calling me a "Shill". I wish I was getting paid, as it would be easier than trading.
Al's website has a chat room I've never tried. I'll be there tomorrow morning.
For now I'm trading the NQ, doing a version of Charter Joes 5B thang.
Which is a variant of an idea I got from Als' book, oddly enough.
quote:
Thank you for not immediately calling me a "Shill". I wish I was getting paid, as it would be easier than trading.
Al's website has a chat room I've never tried. I'll be there tomorrow morning.
For now I'm trading the NQ, doing a version of Charter Joes 5B thang.
Which is a variant of an idea I got from Als' book, oddly enough.



Nah, the shills are easy to spot. They go over the top and still somehow miss being able to sound passionate about what they try to push.

I'm loving CharterJoe's contribution too, it's amazing how applicable it is to many many different markets...

Glad to hear you recognized a variant of it in Al's book. I have the book ordered and coming soon so I'm looking forward to talking about it with you and every else that's read it.
Daily Pivots for day following 28-Aug-2009
Classic
S1 1020.00
S2 1012.75

Actual
31-Aug
High 1021.50
Low 1013.25
http://www.mypivots.com/dn/?symbol=189

Daily Pivots for day following 31-Aug-2009
01-Sep
Classic
R1 1029.50
High 1027.75

S3 985.75
Low 995.25

S2 1003.50
H13:00= 1002.75
So maby it's the time frame in which pivots work best. Looks like to me the weekly
pivot work pretty well witness the reversal yeaterday 9/1 at 1027.00 the wk/pp, this
area was also a projected measured move... The daily pivot? I use in a different way.
Hi RexSpeed

How do you use the daily PP?

02-Sep
High 999.75
Low 991.00
Open 993.25
Close 993.75

Classic
S1 985.25
(nothing close)
Study wasn't usin' them right. Nuff' said.