It’s pretty obvious that many retail traders use pivot points extensively to day trade. The pivot point logic seems dubious to me mainly because it’s just a simple formula without a proper rationale according to me. Just want to get some feedback from traders. Does it really work and if yes, in what ways? Do you use it for indices only or evens stocks? Does anyone have any backtested results?
1 Like
I don’t use it. But for most of the times, simple things works better in stock market.
When I started out as a prop trader at Futures First in 2012, everybody in the Oil & Natural Gas trading desks used Pivot Points to ascertain the support and resistance levels. Did they work? Sometimes they did and other times they didn’t. We didn’t really do detailed research on this but in all honesty, they can be useful but can’t be used as the only indicators to base your trading decisions. The more reliable levels are when R3, R4 break it’s a sign that day will give good trading opportunities on the upside. But it’s all very subjective and in the end, they work because of the self-fulfilling prophecy.
2 Likes
So are you saying that pivot points are not simple? I mean there are many versions of pivot points like woodie’s, camarilla etc. I was thinking maybe standard pivot points maybe useful after Tejas Khoday’s last line in which he says it can be a self fulfilling prophecy. What do you think a bout that?
Each and every indicator works. The whole purpose of creating an indicator is to give users an working system.
But how often does it work? or it’s success ratio is what matters.
IMO, there’s no single indicator which can give 100% correct or profitable signals.