The Fractal Futures Trader » pivot http://www.emini-maven.com/wordpress Learn to Make $500-1000 a Day Trading the E-mini Contracts Sun, 01 Jan 2012 19:53:15 +0000 en hourly 1 http://wordpress.org/?v=3.3 Day Trading: Focus on the Price Action http://www.emini-maven.com/wordpress/2010/10/day-trading-focus-on-the-price-action/ http://www.emini-maven.com/wordpress/2010/10/day-trading-focus-on-the-price-action/#comments Sat, 09 Oct 2010 15:22:01 +0000 trader7757 http://www.emini-maven.com/wordpress/?p=1391 From the onset, let me explain that I use momentum oscillators and a number of moving averages in my ES e-mini trading. On the other hand, momentum oscillators and rate of change indicators are not my primary focus in trade selection. There are several reasons for this, but my best explanation lies in the fact that most oscillators and indicators are lagging indicators. In short, these tools often lead you into late trade entries and tardy trade exits.

Of course, there are a number of oscillators and indicators that claim to be leading indicators. I would dispute the validity of this claim, and most oscillators and indicators that claim to be leading indicators display dubious performance, at best.

This leaves us with a problem; most day trading is in the business of making real-time decisions and lagging indicators do not perform adequately. That being said, there are trading methodologies that can give you insight, and real-time information, as to the directional movement of the market. One caveat though, like all things that are related to the market, there are no guarantees or 100% accurate methods for predicting market movement.

During the course of my daily day trading, I focus primarily on price action as it relates to support and resistance. Throw in a bit of volume analysis, and you have a basic methodology for analyzing the market in real-time. I use my momentum oscillators and indicators to confirm or disprove my thinking about the directional movement of the market. Oscillators are, in essence, a filtering device I employ to increase the accuracy of my trading. It has become very popular in recent years to discount the importance of momentum oscillators and rate of change indicators. Further, there are several traders who treat these instruments with disdain. I think this is a mistake. Momentum oscillators and rate of change indicators perform a very valuable function in filtering out trades that I initially identify as profitable, but after some further analysis using momentum oscillators and rate of change indicators I find divergences from my price action analysis and avoid the trade.

There are number of ways to determine support and resistance on a trading chart and each method has its strengths and weaknesses in market analysis. Many day traders are firm believers in daily pivots which have been use for decades to predetermine where potential support and resistance may occur. I am not especially fond of using a pivot-based system. I find that the market will generally indicate where support and resistance occur. These areas of support and resistance are relatively easy to identify and are typically more accurate than pre-determined levels of support and resistance which are the result of calculating pivot values. Of course, there is nothing wrong with using pivots, especially if you adjust the pivots as you trade to the levels of support and resistance the markets identify.

One of the least used methods of market analysis in day trading, especially in recent times, is analyzing the behavior and placement of individual price bars. In my trading, I find that price bar analysis gives me a distinct advantage over the pure momentum oscillator and rate of change indicator traders. There are a number of texts written on price bar analysis, and going through a detailed explanation of price bar analysis is outside the scope of this short article, though I highly recommend traders study and learn how price bar analysis can give you a unique insight into potential pricing levels and directional movement in the market. To be sure, there are many traders who rely solely on price bar analysis to determine the trades they plan to initiate. For me, I like to have as many tools as possible (without overloading my brain with extraneous information) at my disposal. Momentum oscillators and rate of change indicators are the perfect filtering device for trading. When I notice a divergence in my price action analysis and momentum oscillators and rate of change indicators I avoid the trade. On the other hand, when my price analysis and oscillator analysis indicate the same directional market movement, I feel confident that I have discovered a valid and potentially profitable trade.

In summary, I highly recommend employing price action analysis and momentum oscillators and rate of change indicators into your trading style. All of these analysis techniques will help lead you to sound trading decisions and hopefully, profitable trades. While it is popular to dismiss oscillators and indicators as inadequate lagging indicators, they are very effective filtering devices and impart important and relevant information you can use in your trading decisions.

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]]> http://www.emini-maven.com/wordpress/2010/10/day-trading-focus-on-the-price-action/feed/ 0 Trades around the Pivot Point, R1 R2 S1 S2 http://www.emini-maven.com/wordpress/2010/01/how-to-trade-the-pivot-points/ http://www.emini-maven.com/wordpress/2010/01/how-to-trade-the-pivot-points/#comments Wed, 13 Jan 2010 19:43:19 +0000 trader7757 http://www.emini-maven.com/wordpress/?p=1196 I think the most important fact, yes I said fact, regarding pivots points is they are a prediction of future support and resistance levels.  The key word in the previous sentence is “prediction” and traders should keep that in mind when trading pivot point systems.  I have always been conflicted as to why pivot points (PP) become important throughout the course of the day.  Most traders begin their day by plotting pivot points onto their chart.  With so many people using similar formulas to plot PP it is little surprise that the market stops at the calculated support and resistance levels.  Do the support levels and resistance levels occur because everyone is using a similar system or are they part of the natural function of the market?

It doesn’t matter.

As a trader I am only interested in what the market does, not why it exhibits certain tendencies.  I realize that is a bit of an obtuse answer, but it is one I have learned to live with comfortably.  Of course, it is often discussed among traders and each day trader has his opinion, but to trade the markets it is not necessarily important why this phenomena occurs.

On the other hand, some days the market pays absolutely no attention to pivot points and goes along its merry way without stopping at any particular point on the chart.  More often than not, though, the market will stop at the pivot points, or pause , or reverse right at the plotted lines.  My point is a simple one; pivots are very useful, except when they are not useful.  Whether the market will adhere to the predicted support and resistance is something that you must glean from watching the price action for a bit.  I typically don’t initiate my first trade of the day based on pivot points.

The formula for calculating the days support, resistance, and pivot point is as follows:

R2 = P + (H – L) = P + (R1 – S1)
R1 = (P x 2) – L
P = (H + L + C) / 3
S1 = (P x 2) – H
S2 = P – (H – L) = P – (R1 – S1)

S=support levels
R=resistance levels
H=hi
L=low
C=close

As you might have surmised, the formula plots five lines on your trading chart.  These lines are commonly referred to as S1, S2, PP, R1, and R2.  S1 and R1 are the first lines of potential support/resistance on your chart.  The pivot point is the primary line of support and/or resistance.

Most traders have their own set-up to trade pivots, and I have three that are favorites of mine.  One is a break out through a resistance/support level.

Break outs often time occur when the market is in a consolidating mode and forms a horizontal channel, with the price banging off the top and bottom of the channel, especially if the channel is on a support/resistance line, as is often the case..  After this price action continues for two, maybe three cycles, I will set a sell a point below the channel and a buy a point above the channel. (I am referring to the ES contract here)  Generally the price action will break out of the channel and continue in the direction of the break out and you pick up the trade as it blasts through the channel parameters.  This is a pretty good strategy and can be very profitable.

Breakdowns are also a great way to use your pivots.  This trade is especially good if the market has been hitting a support/resistance line and stopping.  As the price action approaches the support/resistance line, I will set a buy one point below the line in hopes of picking up the trade as it pierces the line.  This trade can be a bit dodgy, especially if the market has been bouncing off the lines all day because the earlier bounces were usually followed a move in the other direction.  Your hope is that the move does not go through the line a bit (as it often does), pick up your trade and change directions.  Again, here you can set your order lower, maybe 1.5 points below the line if you are uncomfortable.

Finally, you trade the pullbacks from R and S.  Let’s say the market pierces S1 and heads straight to S2 and stops and reverses.  Often times the change in direction will go straight to S1 again, retracing it’s move down in the opposite direction.  Once it reaches S1 I will set a trade 1 point below S1.  More often than not, the trade will hit S1 and reverse field to the short side, and if it continues upward you stayed out of the trade by virtue of setting your sell 1 point below S1.  This probably my favorite pivot point trade, and comes with a higher degree of safety than most.  Of course, no specific trade works every time.  If I am stopped out twice on a pivot point trade, I forget pivot points for the rest of the day.

In summary, we learned that pivot points are predictors of future activity.  Further, as predictors they may or may not be effective on a given day of trading.  Your power of observation is key to understanding the effectiveness of a pivot point every trading day.  We reviewed three basic trades that I use; the breakout, breakdown and pullback.  If you learn to combine your trades with an oscillator or a tick chart, you will develop and even higher degree of activity in your trading.  Remember to check yourself when trading pivot points, never trade without stop-loss orders in place.

]]> http://www.emini-maven.com/wordpress/2010/01/how-to-trade-the-pivot-points/feed/ 0 ES Emini Day Trading: Pivot-Fed Announcements-Commentary http://www.emini-maven.com/wordpress/2010/01/es-emini-day-trading-pivot-fed-announcements-commentary-14/ http://www.emini-maven.com/wordpress/2010/01/es-emini-day-trading-pivot-fed-announcements-commentary-14/#comments Tue, 05 Jan 2010 06:21:57 +0000 trader7757 http://www.emini-maven.com/wordpress/?p=1180 Pivot Point for 1-4-10

1140.41  R2
1134.58  R1
1123.91  Pivot Point
1118.08  S1
1107.41  S2

Fed and Fed Agency Announcements

Redbook
[Bullet8:55 AM ET
Factory Orders
[Report][Bullet10:00 AM ET

4-Week Bill Auction
[Bullet11:30 AM ET

The Market started off the new  year in euphoric fashion.  It was a nice day to trade.  I started calculating the Pivots by hand again because I noticed some differences in S and R points and realized I wasn’t calculated them for 5PM.  Some of the automatic pivot point calculators online go from midnight to midnight.  I can’t stand the pivots from midnight to midnight, so I am back to doing it the proper way.

]]> http://www.emini-maven.com/wordpress/2010/01/es-emini-day-trading-pivot-fed-announcements-commentary-14/feed/ 0 ES Emini Trading: Pivot-Fed Announcements-Commentary http://www.emini-maven.com/wordpress/2009/12/es-emini-trading-pivot-fed-announcements-commentary-2/ http://www.emini-maven.com/wordpress/2009/12/es-emini-trading-pivot-fed-announcements-commentary-2/#comments Wed, 30 Dec 2009 05:54:52 +0000 trader7757 http://www.emini-maven.com/wordpress/?p=1176 Daily Pivots for day following 29-Dec-2009 Classic Woodie Camarilla DeMark R4 1147.58 1142.67 1126.15 R3 1139.58 1134.67 1123.95 R2 1131.58 1131.58 1123.22 R1 1126.67 1126.67 1122.48 1125.13 PP 1123.58 1123.58 1123.58 1122.81 S1 1118.67 1118.67 1121.02 1117.13 S2 1115.58 1115.58 1120.28 S3 1107.58 1110.67 1119.55 S4 1099.58 1102.67 1117.35

Fed and Fed Agency Announcements

Chicago PMI
[Report][djStar]9:45 AM ET

Farm Prices
[Bullet3:00 PM ET

Consensus Analysis

Chicago PMI
Released on 12/30/2009 9:45:00 AM For Dec, 2008
Prior Consensus Consensus Range
Business Barometer Index – Level 56.1 54.9 52.8  to 57.0

Market Consensus Before Announcement
The Chicago PMI rose nearly 2 points in November to 56.1 to indicate a month-to-month increase in the pace of overall business activity in the area. New orders rose 1.4 points to a very strong 62.8, a plus-60 level that, because of its strength, will be hard to match in the coming months. Prices paid showed a mild month-to-month increase at 52.6.

I endorse a state of the art trading program for beginners at Trading Concepts, Inc It’s an awesome product that will have you well on your way to trading success. Plus, it has a money back guarantee…you have nothing to lose and thousands to gain.

]]> http://www.emini-maven.com/wordpress/2009/12/es-emini-trading-pivot-fed-announcements-commentary-2/feed/ 0 ES Emini Day Trading: Pivot-Fed Announcements-Commentary http://www.emini-maven.com/wordpress/2009/12/es-emini-day-trading-pivot-fed-announcements-commentary-10/ http://www.emini-maven.com/wordpress/2009/12/es-emini-day-trading-pivot-fed-announcements-commentary-10/#comments Thu, 17 Dec 2009 03:59:54 +0000 trader7757 http://www.emini-maven.com/wordpress/?p=1130 Chart and info courtesy of AMP Trading, get a free demo account and paper trade.  Call Chad at AMP Trading (800) 560-1640 for first class service.  He does a great job.

ESZ9
For 12/17/2009
How To Use
Symbol R1 R2 Pivot S1 S2
ESZ9 1115.58 1120.67 1111.67 1106.58 1102.67

Fed and Fed Agency Announcements

Jobless Claims
[Report][djStar]8:30 AM ET
Money Supply
[Bullet4:30 PM ET
]]> http://www.emini-maven.com/wordpress/2009/12/es-emini-day-trading-pivot-fed-announcements-commentary-10/feed/ 0 ES Emini Day Trading: Pivot-Fed Announcements-Commentary http://www.emini-maven.com/wordpress/2009/12/es-emini-day-trading-pivot-fed-announcements-commentary-8/ http://www.emini-maven.com/wordpress/2009/12/es-emini-day-trading-pivot-fed-announcements-commentary-8/#comments Tue, 15 Dec 2009 03:24:03 +0000 trader7757 http://www.emini-maven.com/wordpress/?p=1120 ESZ9
For 12/15/2009

How To Use
Symbol R1 R2 Pivot S1 S2
ESZ9 1119.50 1125.50 1112.00 1106.00 1098.50

Fed and Fed Agency Announcements

Redbook
[Bullet8:55 AM ET

Consensus Highlights

Producer Price Index
Released on 12/15/2009 8:30:00 AM For November, 2009
Prior Consensus Consensus Range
PPI – M/M change 0.3 % 1.0 % 0.5 % to 1.2 %
PPI less food & energy – M/M change -0.6 % 0.2 % 0.0 % to 0.4 %

Market Consensus Before Announcement
The producer price index increased 0.3 percent in October after dropping 0.6 percent the month before. The rise in the latest month was led a 1.6 percent boost in energy and a 1.6 percent gain also for food. But at the core level, the PPI rate unexpectedly dropped 0.6 percent, following a 0.1 percent dip in September. The fall at the core level was due mainly to declines in prices for light trucks and passenger cars. Looking ahead, there is still upward pressure on the headline figure from higher oil prices. Imported petroleum prices were up 6.2 percent in November. Also, seasonally adjusted spot prices for West Texas Intermediate increased 6.9 percent for the month.

Housing Starts
Released on 12/16/2009 8:30:00 AM For November, 2009
Prior Consensus Consensus Range
Starts – Level – SAAR 0.529 M 0.575 M 0.540 M to 0.600 M

Market Consensus Before Announcement
Housing starts in October unexpectedly dropped 10.6 percent, following a 1.9 percent gain the month before. The fall in October was led by a 34.6 percent plunge in multifamily starts but the single-family component also slipped-by 6.8 percent.

FOMC Meeting Announcement
Released on 12/16/2009 2:15:00 PM
Prior Consensus
Federal Funds Rate – Target Level 0 to 0.25 % 0 to 0.25 %

Market Consensus Before Announcement
The FOMC announcement for the December 15-16 FOMC policy meeting is expected to leave the fed funds target rate unchanged at a range of zero to 0.25 percent. However, traders will be watching to see if the “extended period” language is qualified with any additional wording regarding the future path of the fed funds rate. Traders also will look for updates on the Fed’s view of the recovery and on the Fed’s plan for unwinding balance sheet expansion.

I endorse a state of the art trading program for beginners at Trading Concepts, Inc It’s an awesome product that will have you well on your way to success. Plus, it has a money back guarantee…you have nothing to lose and thousands to gain.

]]> http://www.emini-maven.com/wordpress/2009/12/es-emini-day-trading-pivot-fed-announcements-commentary-8/feed/ 0 ES Emini Day Trading: Pivot-Fed Announcements-Comments http://www.emini-maven.com/wordpress/2009/12/es-emini-day-trading-pivot-fed-announcements-comments/ http://www.emini-maven.com/wordpress/2009/12/es-emini-day-trading-pivot-fed-announcements-comments/#comments Sun, 13 Dec 2009 15:27:30 +0000 trader7757 http://www.emini-maven.com/wordpress/?p=1116 Chart courtesy of AMP Trading, get a free demo account and paper trade. Call Chad at AMP Trading (800) 560-1640 for first class service. He does a great job.

ESZ9
For 12/14/2009
How To Use
Symbol R1 R2 Pivot S1 S2
ESZ9 1111.92 1115.83 1106.58 1102.67 1097.33

Fed and Fed Agency Announcements

With the lack of big announcements today, it should be a fairly quiet trading day, at least from a news standpoint.
]]> http://www.emini-maven.com/wordpress/2009/12/es-emini-day-trading-pivot-fed-announcements-comments/feed/ 0 ES Emini Trading: Pivot-Fed Announcements-Commentary http://www.emini-maven.com/wordpress/2009/12/es-emini-trading-pivot-fed-announcements-commentary/ http://www.emini-maven.com/wordpress/2009/12/es-emini-trading-pivot-fed-announcements-commentary/#comments Wed, 09 Dec 2009 07:06:53 +0000 trader7757 http://www.emini-maven.com/wordpress/?p=1101 ESZ9
For 12/09/2009

How To Use
Symbol R1 R2 Pivot S1 S2
ESZ9 1102.42 1114.83 1095.08 1082.67 1075.33

Fed and Fed Agency Announcements

Jobless Claims
[Report][djStar]8:30 AM ET
RBC CASH Index
[Bullet9:00 AM ET

Elizabeth Duke Speaks
12:45 PM ET

Treasury Budget
[Report][djStar]2:00 PM ET
Money Supply
[Bullet4:30 PM ET

Consensus Analysis

International Trade
Released on 12/10/2009 8:30:00 AM For October, 2009
Prior Consensus Consensus Range
Trade Balance Level $-36.5 B $-36.4 B $-38.0 B to $-35.0 B

Market Consensus Before Announcement
The U.S. international trade gap in September widened to $36.5 billion from $30.7 billion worth of red ink in August. Exports rose 2.9 percent while imports jumped 5.8 percent. The worsening of the trade deficit was led by a wider petroleum shortfall which came in at $20.5 billion compared to $16.6 billion the previous month. The nonpetroleum gap increased to $25.9 billion from $24.3 billion in August. Looking ahead, the sneak peak indicators are mixed. First, there could be a drop in auto imports from Canada as not as many are needed with cash for clunkers having concluded. But a drop in shipments of nondefense capital goods in October could show up in lower capital goods exports. Also, higher oil prices will cut into any potential improvement in the trade gap.

Jobless Claims
Released on 12/10/2009 8:30:00 AM For wk12/5, 2009
Prior Consensus Consensus Range
New Claims – Level 457 K 460 K 450 K to 500 K

Market Consensus Before Announcement
Initial jobless claims fell 5,000 in the November 28 week to 457,000, extending a run of impressive improvement. Continuing claims for the November 21 week rose slightly to 5.465 million with the insured-workers unemployment rate steady at 4.1 percent, well down from a summer peak of 5.2 percent.

Treasury Budget
Released on 12/10/2009 2:00:00 PM For November, 2009
Prior Consensus Consensus Range
Treasury Budget – Level $-176.4 B $-135.0 B $-170.0 B to $-100.0 B

Market Consensus Before Announcement
The U.S. Treasury monthly budget report showed a massive $176.4 billion deficit in October, the first month of the government’s fiscal year. The year-ago October deficit was $155.5 billion. Latest receipts were down a year-on-year 18 percent with outlays up 6 percent. Looking ahead, the month of November typically shows a deficit for the month. Over the past 10 years, the average deficit for the month of November has been $68.4 billion and $95.3 billion over the past 5 years. The November 2008 deficit came in at $165.4 billion.
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