How to improve your trading performance?
My answer is always the same:
Add Pivot Points to your charts.
In Pivot Point Trading Strategies I teach you how to build an effective trading systems based on Pivot Points.
Or if you need more details, read more below.
FIND YOUR EDGE WITH PIVOT POINTS
Pivot Point gives you valuable information about support and resistance areas.
But what’s the best place to open a position? What’s the best place to close it? How to manage risk?
That’s why you also need a trading system so you can use Pivots efficiently.
You’ll find all the answers in this guide.
The guide is divided into few main sections:
- Pivot Points – Introduction (so we can start with the same knowledge)
- Opening positions with Pivot Points – trend trading – strategies
- Opening positions with Pivot Points – reversal trading – strategies
- Closing positions with Pivot Points – taking profit strategies
- Risk management
The guide has a very practical form.
You’ll learn how to trade with Pivot Points – how to read market, when to open position and take profit, where to place stop loss.
You’ll get more than 100 pages full of strategies.
FOR WHOM IS THIS GUIDE
For those who want to improve their trading strategies.
For traders who have problem with getting consistent trading results.
For all people looking for best trading strategies that can help them make money.
This is not a guide that teaches trading from scratch. You should already have some basic knowledge about trading.
On the other hand, you don’t need to have some advanced knowledge. I show you step by step how to build strategies based on pivots.
Different traders have different preferences. Some prefer to use only price action; others don’t mind using oscillators. In this guide, I’ll show you how to combine different strategies with Pivot Points. Everyone should find something for themselves.
Strategies that work!
In all of my trading systems, I use pivot points. I trade manually, and I build trading robots. In each approach, I use pivots.
In the past, I was testing many different strategies. But when I started to build simple trading robots, I was able to test more systems simultaneously.
The conclusion was simple – it was easiest to get consistent results with Pivot Points’ strategies.
Below result from one of my trading robots:
Of course, it’s not a straight move up to the north. Still, in the long term, you can make money with pivots.
THE BIGGEST ADVANTAGES OF USING PIVOT POINTS
Let’s start with the most important one – you know what’s happening on the chart.
You know what stage the market is in. Is the chart screaming sold out with the price near important support S levels? Or is it overbought and strong resistance R2 and R3 are close by?
You can use that information to open a trade at best possible place (sometimes almost right at the start of the new move).
Pivot Points helps you to choose the best place to close the position and take profit.
What matters in trading is whether you closed trade with a profit or not. With the help of Pivot Points you’ll be closing trades in better places and making more money on each profitable trade.
The old saying trend is your friend is still valid.
However, markets are changing, thanks to increasing automated trading, among other things.
You need to adjust your strategy and use tools that work in current conditions.
With Pivot Points’ help, you can participate in reversal moves – join them practically at the beginning and take most profit from the movement.
You can also use them to catch trending moves (so more classical approach).
Pivot Point is the modern tool that’ll help you build a strategy working in current markets.
DIFFERENT MARKETS – TRADE WITH PIVOT POINTS: COMMODITIES, STOCK MARKET, FOREX
You can use Pivot Points on practically every market – commodities, stock market, FOREX.
In this guide, most examples are stock indices and FOREX because that’s what I mainly trade. However, the trading rules apply to all markets. They may require small modifications, but I also discuss and explain how to adjust them to the market you’re trading.
PIVOT POINTS NOT ONLY FOR DAY TRADING – SWING TRADING ON HIGHER TIME FRAMES
Most often, Pivot Points are used in day trading simply because they work so good.
However, they can also be used in swing trading or long term trading.
You’ll find Pivot Points adapted to every kind of strategy:
- daily Pivot Points – for day trading strategies, when you trade on shorter time frames (5m, 15m, 30m, 1h)
- weekly Pivot Points – for swing strategies, when you trade on time frames such as 1h, 4h, daily
- monthly Pivot Points – for swing trading strategies, long term trading strategies, when you trade on longer time frames such as 4h, daily, weekly
Pivot Points are a valuable addition to virtually any investment strategy.
They can also be a solid fundament to build a new strategy from scratch.
WHO IS THE AUTHOR?
Hi, I’m Simon David and I’m a retail trader.
In my trading, I focus on building solid strategies and using proper risk management.
Trading is my way of making money but also a hobby. I like to share knowledge with others; that’s why I run a blog pivot-point-trading.com.
Most strategies on the Internet show only the tip of the iceberg when it comes to Pivot Points’ capabilities. Hence the decision to write this guide.
Everything has changed since I added Pivot Points to my charts.
My results, my understanding of the market, my confidence. My risk management.
But it took me many years to test different strategies and ideas.
Now I know what’s working and what’s overrated.
I share that knowledge with you hoping that it’ll bring you so much change in your life as it did in my.
More about buiding strategies
What does a good strategy mean?
First, let’s talk about the strategy itself. How to build a good strategy? What makes a good strategy?
There are several elements here. First of all, it’s all about how well the strategy fits your style. You should feel good with a trading strategy. There is no point in creating a day trading strategy if you don’t like this style and don’t want to sit in front of a monitor all day long watching the charts.
A good trading strategy is a strategy that you can describe. Of course, there are traders who make investment decisions based on a hunch and intuition. But this is a minority. Most traders should use strategies that have clear rules. You should be able to describe these principles.
In a strategy it’s also important to specify not only the entry and exit elements of the transaction, but also the size of the position and the risk taken during the transaction.
Importantly, the strategy should also be tested. The strategy should include elements that you’ve checked on historical data and know they work.
What should the strategy contain?
It should contain conditions that you can write down. In your strategy you want to have as few intuitive elements as possible. You want to have conditions that you can include in writing.
The most important elements that the strategy should contain:
- Signal to open a position – based on price action, price patterns, oscillators or other methods. Something you can describe in the plan.
- Confirmation of the conditions for opening a position – whether the trend agrees or there are no warning signals (such as an important resistance from a higher time frame).
- Take profit taking – when you should close positions and take profit
- Risk management – when you should close a position and take a loss. How much risk do you take with each position
- Investment time and costs – how long do you plan to keep an open position, what are the costs
- Instruments on which you invest – what do you want to trade
Backtesting for the creation of a trading strategy
We described above what the strategy should include. But where to get this information from?
Common mistakes when searching for information to be included in the strategy are:
Writing what works now into the plan
That is, you trade on your normal account and try different strategies and methods. You then write down those that worked today. The problem with this approach is that what works now may be due to a momentary balance of power in the market. Most often in the long run such strategies bring losses.
Inventing rules and writing them into the plan
An approach in which you enter entry rules invented on the fly into your trading plan. This means that you think something should work and you write it into your trading plan right away.
Most of these errors can be eliminated with the help of backtesting.
First, more about the backtesting methods themselves and then we will go on to discuss backtesting in practice.
There are two main ways in which you can conduct backtesting:
So here you check the historical charts and manually enter transactions and their results – e.g. in excell or another program. Then, at the end, you evaluate the effectiveness of the strategy.
2. With the help of dedicated tools
Here you use dedicated tools for backtesting. With them you can open and close transactions directly from the tool. This makes strategy testing much more convenient. There are quite a few such tools, they are most often dedicated for given trading platforms. For example for Metatrader 4 I use Forex Simulator and I would recommend them to everyone using Metatrader.
How to use backtesting for plan generation
Backtesting can be used to:
- Create the plan from scratch
- Modification of the trading plan
You then test your ideas in practice on historical data. You write down what worked and what did not work. It’s during such tests that you can freely test different ideas and strategies without risking anything.
Some advice about building a trading strategy:
When testing an idea for a strategy, check how it behaves on different time frames, on different instruments. Sometimes it happens that a strategy will perform poorly on one time frame and much better on another.
With the help of backtesting you can also improve an existing strategy that you have used so far. Do you think that it would work better with other oscillator parameters? Check this out.
It is worth testing for a longer period. The strategy may have great results for the last 3 months, but for a period of 3 years it may not be that pink.
Why is a strategy based on Pivot Points a good choice? Pivots is a great tool that is helpful to many traders. With its help you can immediately see the most important support and resistance levels. You can use this information if you want to close a position and make a profit or if you are looking for opportunities to open a reversal trade.