Learn To Trade The ‘Woodie’ Pivot
Editor’s Note:
The following is an article written by TradingMarkets member Paul
Kirchhoffer (pk in TradersWire). I hope you enjoy and profit from it.
Brice
PS The photo
on the home page is of me, just FYI.
Old Salty
Learns to Trade The Woodie Pivot
| All the preparations had been made and the flight plan had been filed. At first light, Old Salty set out from his home in the |
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| With a bit of luck and a following wind he’d make Grassy Key by sundown and there he’d meet up with his |
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He flew South East to
Key Largo,
then down along US 1 to Islamorada and finally on to Grassy Key. He circled into
the wind, flying low and slow as tried to recall the exact location. Suddenly, a
flash of gold came through the fading sunlight and caught his eye. Sure enough,
there was no mistaking that redheaded woodpecker and he appeared to be shoveling
something that looked like gold coins into a sack.
“Hey Woody,” he said, “It’s
good to see you. What’s with all those coins? Woody grinned and said, “It’s
been too long, mi amigo. Come inside, rest your tired feathers and I’ll tell you
about the magic pivot.” Woody produced two glasses and a bottle of
Captain Morgan rum. He poured and said, “Kid, do you remember that time I
went to Chicago and meet with those floor traders? Well they told me on gap days
they had to throw out their regular floor traders’ pivots ‘cause they were
useless. So we all sat down with this good fellow named Jack Daniels and we came
up with this new pivot formula. Here’s how it works: We take yesterday’s high,
plus yesterday’s low and twice today’s open and divide by four. Heck, those
floor traders liked it so much they called it the Woodie Pivot. Before I even
knew what was happening, I had a website and some friends made me an eSignal
template. That template has been downloaded 9,367 times you can bet your bottom
dollar there are thousands of little woodpeckers out there following that pivot
every day. Poor Salty was still thinking about all those gold coins. He
stretched his wings and shook his head to clear the rum. Woody he said,
obviously you’ve done very well with this thing but how can I use it to make
money?
“Oh, that’s easy part,
amigo. Look, there’s this guy named pk who hangs out at TradersWire and he uses
it every day. He posts the Woodie pivot at the open and then looks for a
reversal the first time price
approaches it. Here’s what he said in real time on 2/28/95:”
pk1014 (Feb 28, 2005 9:31:17
AM)
ym woodie pivot 10806
…
pk1014 (Feb 28, 2005 9:56:18
AM)
long ym 10806
…
pk1014 (Feb 28, 2005 9:58:29
AM)
out some ym +10
“Now have a look at his chart.”
Â
Old Salty stared in amazement till finally he
exclaimed “Wow, Woody, that thing really is magic! Does it always work like
that?” Woody shook his head and said, “Come on kid, you already know that
nothing works all the time. But that guy pk swears it’s a high percentage trade
the first time price approaches the pivot and he uses it looking for a
quick 10 points every chance he gets.” Salty raised his glass in a salute and
said, “Nobody’s better than you, Woody.”Â
Next morning, they each grabbed a sack of coins
and headed straight to their favorite Key West watering hole. Upon arriving at
the Margaritaville Café, they immediately recognized the voice of another old
friend, Jimmy
Buffett.
Drinks flowed, fish stories were exchanged and
together they sang:Â
“I took off for a
weekend last month
Just to try and recall the whole year
All of the faces and all of the places
Wonderin’ where they all disappeared
I didn’t ponder the question too long
I was hungry and went out for a bite
Ran into a chum with a bottle of rum
And we wound up drinkin all night
It’s these changes in
latitudes, changes in attitudes
Nothing remains quite the same
With all of our running and all of our cunning
If we couldn’t laugh we would all go insane “
Changes in
Latitudes, Changes in Attitudes
    —Jimmy Buffett, 1977
Â