Profiting From TradingMarkets: How To Use Floor Trader’s Pivots

  • September 1, 2004
  • Brice Wightman




It’s not a very
good feeling to come into the trading day and not have any kind of plan.
Fortunately there’s help. In this article, I’ll show you an idea that I think
will help your trading.

In
TradersWire
each day, we post the Floor Trader’s Pivots:

 

08:52:32

 
Dow-Mini (YMU4)
S&P E-Mini (ESU4)
Nasdaq Mini (NQU4)

R2

10242.30

1112.17

1384.67

R1

 10207.70 1108.08 1377.33

Pivot

 10140.30 1101.17 1365.67

S1

10105.70 1097.08
1358.33

S2

10038.30 1090.17 1346.67

These are the numbers from Wednesday September 1, Pivots are nothing new —
floor traders have been using them for years. And because they watch them, so
should you. Reversals happen at or near these levels.

Let’s focus on the S&P E mini, and the R1, Pivot and S1 with reference to the
chart below:

At (A), we reversed near the pivot. At (B) we
found resistance and sold off after making a Haggerty 1,2,3. At (C) we bounced
off the S1 pivot with tremendous positive divergence. If you traded the e-minis,
this was an excellent trade, yielding a minimum of 5-6 points.

Today’s action is not abnormal; we see reversals
like this take place at pivot levels frequently. And, you don’t have to trade
futures to benefit from this. You can time your stock trades using the pivots.
Just make sure that the stock you are trading is either in the S&P 500 or moves
substantially with it.

Using pivots gives you a plan for the morning.
You’ll know in advance the levels at which reversals are likely.

If you need any help with using pivots, please
feel free to e-mail me at brice@tradingmarkets.com.

Brice Wightman