Pivot Point Trading - Floor Pivot Point Trading Method

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Pivot Point Trading - Floor Pivot Point Trading Method

Floor Pivot Point Trading - Trading Concepts

Remember, considering floor pivot numbers in trading is done because they are 'known' price levels that are being 'watched' and 'used' by many other traders, and thus, this provides very useful information; floor pivot trading is NOT being done inconsistent to base method trading.

As mentioned above, I find two things that are of primary significance: 

(1) 'knowing' that I may have a trade setup that triggers at the same time that a floor pivot trader will be entering a trade in the opposite direction.  This does not mean that I will not take the trade, however I may want to 'wait' to enter until I see the reaction that will occur - seeing IF the floor number will reject and fail OR whether the floor number will break and continue - my trade then being the failure or continuation.  There is a trade off that exists in the decision to wait, that trade off being a willingness to enter at a 'worse' entry price in order to enter with 'better' timing in terms of movement in the direction of my trade, or possibly avoid taking a trade that resumes the prior swing direction.

(2) 'knowing' that I may have a trade setup that triggers at the same time that a floor pivot trader will be entering a trade AND in the same direction.  I have used the terminology textbook base setup in referring to a 'general' base setup having some additional component that adds to the 'odds' of the trade; trading in synchronization with another method entering at the same time, and in the same direction, is an example of a textbook base setup.  Where I find this particularly important is in the case of the addon decision, where you have to decide to risk existing initial trade profits, in an attempt to increase trading size to what you perceive to be a swing with additional directional strength.

 

 

left chart:  up swing hits the floor pivot at the yellow circle with a price momentum divergence AND thus the trigger for 2 mixed method trades:  (1) pmd short (2) floor pivot reject short - significant to us because at this time we are long AND we 'know' that there is selling against our trade.  this is a good place to take a profit on an available contract AND decide where you will trail your trade to - don't exit the trade AND do not do an addon trade - not at a test of a floor number hitting with a pmd. 

yellow circle = floor pivot reject hit AND mixed method sell.  yellow line-purple line = floor pivot reject.  purple line-red dot = floor pivot failure AND where a short can be done.

left chart - top drawing:  i would not sell a line that hits when price is moving up - regardless of what that line is - for instance the floor pivot/yellow circle.  as well - it is not enough to simply have a reject of the line - i want the combination of the reject AND the failure.

WHY?  consider the dark blue lines - lines that show the scenario of a reject BUT also a higher low that then breaks back through the floor pivot and continues the prior swing.  the situation that i am particularly looking for is the purple line-blue line/green dot - as support has been tested and has held AND when this breaks back through the floor pivot it is what is referred to as a triple break:  (1) breaking the reject of the floor pivot (2) breaking the high inside the yellow circle.  this triple break setup is a setup that 'leads' to the failure of the mixed method trade AND resumes the 'bigger' buy swing - this combination being a textbook addon setup.

consider the possible trade off:  (1) an open buy is held with an addon setup triggers AND avoiding a losing sell (2) getting the reverse BUT having to enter at the red dot and a worse price.  i continue to see that it is 'best' to look for swing continuation first and reverse second after getting reject-failure timing - instead of attempting to get the best price.

right chart - top drawing:  this chart is considerably different than the left chart - in this case the swing is up AND the trade that will be done is a buy as the yellow circle break then pullback to the floor pivot.  regardless of the swing into the trade - going long here is still buying when price is moving down - i still want to see this line reject AND continue like the yellow-purple line/green dot.  you also can see this as a triple break setup as well:  (1) a very good addon if already long into this setup (2) evidence of swing reverse IF further to the left there was a bigger swing down and you went flat that trade.

right chart - bottom drawing:  again consider the concept of reject-failure OR in this case reject-continuation since the floor pivot is immediate support into a buy AND the 'best' price-'best' timing trade off.  do the buy at the green dot as the reject-continuation combination - avoiding the yellow line-blue line or purple line-blue line moves which instead of continuing give lower highs that break back through the floor pivot. 

consider the case of the purple line-blue line/red dot: instead of being long a floor pivot reject before continuation - this is actually a short AND the failure of the mixed method buy - you also see how this is a triple break setup:  (1) breaking through the reject of the floor pivot (2) breaking through the low inside the yellow circle.

 

Floor Pivot Point Trading - Trade Related Setups

Considering floor pivot point trading both in the context of 'our' method, as well as in the context of 'their' method, has both enhanced the effectiveness of trading decisions through this awareness, while also giving an additional 'group' of trading setups based on the price movement after the mixed method trade occurs - using rejects to hold existing trades and also trade with 'them'/using mixed method failure points to trade against 'them'.

 

floor1:  red dot short and strong down swing.  the indicators reverse BUT this trade is at the floor pivot which is also a sup:res line from the continuation break to the lows.  hold the yellow circle on the first hit with a maximum amount that you will let this line break AND then short the blue line wedge break at the yellow line/red dot as a swing resumption addon.

floor2:  you are long from the left coming into this chart AND your swing goes to R1 where there is a price momentum divergence.  the mixed method trader is short the pmd reject of R1 at the yellow dot BUT this is not our method trade - we are still trying to hold/trail our last contract.  then with the fast momentum hook/yellow circle - the yellow line/red dot is done as a reverse of the buy on what is referred to as a swing failure trade a pmd 'against' a directional trade.

 

 

floor3:  similar to floor2 - you are in a trade that makes a swing high-low at a floor number - in this case you are short AND there is a pmd low at the floor pivot.  the mixed method trade is the yellow dot WHICH is not our trade.  i held a last trailing short for the first break of the yellow line which did not break it by my maximum trail amount - THEN when that line broke and held as support - did the green dot buy as a reverse of the sell.

floor4:  the floor number on the chart is R1 and price is consolidating around this line after a buy swing from the left.  there is a swing double top AND the red dot sell is done as a R1 break as a triple break into the 2 dark blue dots which was the consolidation double bottom.  the swing low isn't a pmd as there is a momentum low to match the price low BUT it reacts similarly - the short is exited at the dark blue dot BUT there is no buy setup yet to reverse. 

price continues back to R1 and stalls for a couple of bars AND then the green dot buy is done as a pause-break - the trade done because it's in the direction of the 'bigger' move - i don't like that setup IF it was counter.  price breaks through R1 and the left side double top AND now retraces back to R1 to see if it will shift to support.  momentum reverses/yellow circle - BUT there is no sell setup and the buy remains open.  R1 does shift to support AND momentum resumes - giving the blue line/green dot as an addon.  this was a very good directional continuation setup - especially IF there had been a mixed method sell on an oscillator extreme cross - as this is a setup for the failure of that trade.

 

 

floor5:  long the green dot on a momentum resumption setup - the swing goes to the floor pivot.  the floor pivot hits with a pmd AND there is a bigger pattern with the yellow line/blue line which is a reversal wedge on a reject of resistance - again that resistance being the floor pivot.  a pull back to the floor pivot as resistance would be a base setup for a mixed method trade/floor number trade.  the red dot sell is done with the mixed method trader in what is either a pull back to resistance in a down market since we are 'well' below the floor pivot OR a 2way market.  i wouldn't want to do this initial reverse in an up market - instead an open buy would first be trailed to see if price support would hold.

floor6:  consolidation 'around' the floor pivot - trying to shift it to support.  the green dot buy comes after a double higher low hold at the blue line AND with a momentum resumption after the break of the floor pivot.  the red dot sell is then done after a swing double top and a break of the yellow focus line which has 2 hits at the dark blue dots so this is setup as a triple break of this line.  neither of these trades are really related to the floor pivot.

floor pivot related trades:  (1) yellow line reject at the blue dot.  considering the way this trade is setup with the focus line shift and reject as resistance WITH mex flow continuing down AND do note the double hit of the floor pivot - i would suggest that the floor pivot is setup to break AND should be done - any pullback to the floorpivot buy has already been done so this would be a failure of that trade (2) blue line/red dot as a reject of the floor pivot AND since the blue line is a matched price setup as well - this is done as a very good addon setup to the red dot initial sell.

 

consolidating 'around' a floor number is one of the toughest trading situations i know - this is a more extended discussion of this situation AND the relationship between possible method trades AND the floor number location.

floor7:  consolidation 'around' the floor pivot - trying to shift it to resistance.  this is the point of discussing this chart - the context of the floor pivot location -vs- what may be different method decisions-actions IF the floor pivot isn't here.  on this chart YOU may have a hold-reentry decision OR an exit-buy decision - at the same time THEY may have a pullback to the floor pivot sell decision. 

the red dot sell was a method trade - a horizontal-diagonal line break after a pmd at resistance - this trade was a re-entry to another sell further left AND the directional decision 'allowed' this trade into the floor pivot.  the sell gained 2 partial profits AND at the dark blue dot and the reverse a decision has to be made to - buy-exit-hold the trailing short.  with 2 partial profits AND a decision not to reverse - i held my last contract to see if there would be a reject on the pullback to the floor pivot - there was also some 'room' here to break even on the trailer. 

there was a double top hold right above the floor pivot - IF price had then retraced back to the blue line and shifted this to support AND then broke the floor pivot like the dark blue line/light blue dot - this would have been done as a reverse to long as a 'focus' line shift triple break through the floor pivot.  instead this double top did hold - i would consider the yellow dot as a double top floor pivot reject with a pmd short.  IF flat i would reenter on this BUT not until the purple dot and a break of the line - what i would consider as the floor pivot reject-failure combination - because at the time of the yellow dot i would be looking for that potential blue dot buy.  IF this trade is taken - clearly you want the lows to break and the light blue line to shift to resistance BUT on this chart and the consolidation around the floor pivot trying to turn it into resistance - i think you are 'committing' to stay short below that retrace double top and not do anything because of a momentum indicator 'flip' OR until you get a buy reverse which would be like the 2nd pair of dark blue line/light blue dot.

the floor pivot does hold-reject - the yellow dot mixed method trade is still short AND based on management the red dot or purple dot is still short.  consider the red dot2 sell - in this case since the other shorts would be open - this is an addon setup.  the relationship to the floor pivot is in terms of reject-failure -vs- reject only - again considering that the reject may be to a higher low which holds and becomes a buy.  this is what is so difficult about consolidation - there always seems to be the need to think of trades in both directions - reject-failure or reject-continuation helps solve the dilemma.  when the blue line breaks AND shifts to resistance - this is a reject - when it breaks the low before this retrace you get the failure AND this is actually when i can also say that this last test of the floor pivot has failed.  i particularly like this setup because it's also a triple break setup - that being the triple break of the 2 yellow dot lows while consolidating.

 

Pivot Point Calculator

Enter the high low close from the previous trading session [I use those from the day session] then push the calculate button to get the floor pivot AND 3 levels of support and resistance.  This calculator has been constructed to use the floor pivot point formula calculations as written to the right of the various levels on the calculator.

	Pivot Calculator
High
Low
Close
R3		High + 2 * (Pivot - Low)
R2		Pivot + (R1 - S1)
R1		(2 * Pivot) - Low
Pivot		(High + Low + Close)/3
S1		(2 * Pivot) - High
S2		Pivot - (R1 - S1)
S3		Low - 2 * (High - Pivot)