AfTA Profiting with Pivot-Based Concepts 051512 Profiting with Pivot-Based Concepts... · Profiting...
Transcript of AfTA Profiting with Pivot-Based Concepts 051512 Profiting with Pivot-Based Concepts... · Profiting...
Profiting with pivot-based concepts
with Frank Ochoa
Sell
Sell
Sell
Sell
Sell
Sell
A ROAD MAP TO THE MARKET
Agenda
An Introduction to Pivot-Based Indicators
• Why are Pivots Useful?
• Types of Pivots
An Introduction to Pivot-Based Analysis
• Pivot Trend Analysis
• Pivot Width Analysis
• Pivot Relationships
Emulate the Pros
Trade with Confidence
INTRODUCTION TO PIVOT-BASED INDICATORS
why are pivots useful?
• Price-based, market-generated information
• Help identify value, overbought, and oversold conditions
• Leading indicators; zero lag
• Lead to self-fulling prophecy
• Allow for an array of analytical methods
Who Can Use pivots?• EVERYONE!
• Novice traders, experienced traders, and traders without prior knowledge of pivots
• Pivots are price-based, so they on all timeframes - perfect for day, swing, and position traders
• Pivots work on any chart with valid price action - perfect for stocks, futures, ETFs, and more!
a roadmap to the market
What are Pivots?
Pivots reveal hidden areas of support and resistance for an upcoming period of time. They are often calculated by using prior price data in a specific formula or equation.
Calculating floor pivots
R2 = PP + (H – L)
R1 = 2 x PP – L
PP = (H + L + C) / 3
S1 = 2 x PP – H
S2 = PP – (H – L)
R1
S1
PP
R2
S2
applying the formula
High
Low
Close
Prior price information…
…creates the pivots for the upcoming period of time.
Types of pivots
Market Profile Levels
Floor Pivots
Camarilla Pivots
R1
S1
PP
TC
BC
H4
H3
L3
L4
VAL
POC
VAH
R2
S2
H5
L5
an array ofanalytical methods
• Price Forecasting
• Trend Analysis
• Pivot Relationships
• Multiple Timeframe Analysis
• Powerful Confluence
INTRODUCTION TO PIVOT-BASED ANALYSIS
Intro: Pivot-Based Analysis
• Pivot Trend Analysis
• Pivot Width Analysis
• Pivot Relationships
Pivot Trend Analysis
• Buy at support in a bull trend
• Sell at resistance in a bear trend
• Keeps you disciplined to the trend
• Keeps focus on higher probability opportunities
Pivot Trend Analysis forces you to become disciplined to the trend by only buying in an uptrend, and selling in a
downtrend.
Pivot Trend Analysis
Buy at SUPPORT in a bull trend
Pivot Trend Analysis
Buy at SUPPORT in a bull trend
Pivot Trend Analysis
Sell at RESISTANCE in a
down trend
Pivot Trend Analysis
Sell at RESISTANCE in a
down trend
“Can’t See the Forest...”
“It’s going down. I need
to SELL.”
“...for the Trees”
Was actually a pullback within a bullish trend
Sell at Resistance...until
Sell Here
Close above value “breaks”
downtrend
Pivot Width Analysis
• Prior price behavior helps forecast upcoming price behavior
• Unusually wide Value Area forecasts sideways trading
• Unusually narrow Value Area forecasts breakout and/or trending behavior
• Helps anticipate market behavior
• Choose which markets to trade
Pivot Width Analysis allows you to forecast potential price behavior using the width of the Value Area.
Wide
Narrow
Pivot Width Forecasting
Wide VA = Sideways
Narrow VA = Trending/Breakout
Pivot Width Forecasting
Wide VA = Sideways
Narrow VA = Trending/Breakout
Pivot Width Forecasting
Pivot Width Forecasting
Pivot Relationships
• Helps you gauge market strength/weakness
• Helps you anticipate potential price behavior
• Allows you to focus on the best trading opportunities
• Keeps you disciplined
• Useful for planning your trades
Pivot Relationships allow you to gauge market strength and anticipate potential price behavior.
HV
HV
LV
LV
IV IV
Higher value relationship
• Most bullish relationship
• Occurs when the value area is completely higher than the VA of the prior session
• Look to buy at support (a pivot) in a bull trend
• Buy into weakness, sell at a new high within the trend
Higher Value Relationship
Higher Value
Gives bullish bias, look to buy into
weakness at support
higher value relationship
Higher Value: NQ
Higher Value: NQ
O
Failed Higher Value: NQ
lower value relationship
• Most bearish relationship
• Occurs when the value area is completely lower than the VA of the prior session
• Look to sell at resistance (a pivot) in a bear trend
• Sell into strength, cover at a new low within the trend
lower value relationship
lower value relationship
Lower Value: YM
Lower Value Relationship
Lower ValueGives bearish bias, look to sell into strength at
resistance
inside value relationship• Most explosive relationship
• Occurs when the value area is completely inside the VA of the prior session
• Initiative participants step in, aggressively push price to new value
• Gaps out of range/value tend to work best
• Trend day usually develops
inside value relationship
inside value relationship
inside value relationship
inside value relationship
Inside Value: PG
Inside Value Relationship
Helps identify charts poised for a breakout
opportunity
Inside Value
emulate the pros
emulate the pros
• Create a homework routine, analyze the market before the bell
• Plan the trade, trade the plan
• Set goals: profit objectives, loss limits, revenue projections
• Create a trade journal
• Practice discipline
Emulate how professional traders approach the market, and eventually you will become a professional.
Identify the setup
Identify the action zone in your homework
(Plan the Trade)
Higher Value Setup
Higher Value
EXECUTE YOUR PLAN
Execute your plan, trade to your target
(Trade the Plan)
Bull ADR Target
IDENTIFY THE SETUP
Identify the setup in your homework(Plan the Trade)
Inside Value Setup
EXECUTE YOUR PLAN
Open beyond range/value confirms setup, trade to
target(Trade the Plan)
Bull ADR Target
trade with confidence
• Do your homework
• Use pivots to develop a theory for potential price direction/behavior
• Identify potential setups ahead of the opening bell
• Let the market prove or disprove your theory (you can make money either way)
• Trade with confidence and execute your plan
The BEST traders prepare for success.
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AdvancedProfiling
Techniques
Volume Profiling
Techniques
The ADR Method
EDUCATION
Powerful course utilizing Market Profile levels for analysis and triggers.
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