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

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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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