May 28, by Tim Bourquin. Here we talk with one trader about how he combines pivot points with specific moving averages to find trading opportunities each day in the markets. Mark, What is your overall approach to the markets. Do you consider yourself a technician? How do you categorize yourself?
I use just one strategy which is looking at basic pivot points. Pivot points are calculated in different ways, but they are basically places where price is likely to change direction. Two of them are long points places where a long trade might be appropriate and two of them are short points where a short trade may present itself. And when I get signals based on that, I will make trades on either the long or short side as the pivot points are approached.
Conversely, if the market price rises above the pivot point, it may act as the new support level. From there, I will use moving average lines — usually 20, 50 and day moving averages — to look for confirming levels of support and resistance.
What types of chart timeframes do you monitor to see the moving averages and pivot points? The charts that I use are typically short-term in nature. I use a three-minute chart, a five-minute chart, a minute chart, and then I look at a daily chart with those same moving averages. I typically find those on the three and five-minute charts.
Are you scanning the whole market for a pivot point opportunities or do you like to focus on these handful of stocks and the leveraged ETFs that you follow? I will look for some other names in the news especially during earnings season, but I am a big believer in getting to know your names very well and getting to know them better than anybody else.
After I do that and if I still have some free time, I look to see what else is in the news and maybe see if there are other opportunities here and there. How many trades a day typically are you putting on and how many do you have on at one time? But that also includes scaling-in to positions. So, if I buy shares of Apple and eventually get up to shares of Apple, that could be four trades. I also scale out of positions so that may be another four trades as well. I probably trade somewhere between 50, to , shares a day.
How to Use Pivot Points in Forex and Stock Trading?
Your trading system seems relatively simple. How did you come about learning what worked for you personally? I think trading is all about understanding yourself, understanding your own mentality and learning what works well for you and then trying to find the system that fits that best. I mean, my attention span is probably shorter than the average person, so for me to be a day trader it just fits. As you can tell, simple support and resistance are critical to me. Well, again, scaling-in with a lower number of shares helps a great deal for me to feel comfortable within a trade.
So, if I enter a trade with a few hundred shares and it goes against me, what am I really losing? What I look for is a critical moving average line on the chart. And then if it bounces off to a day, I know I probably have a very good level where I can keep buying in. How do you set your profit targets? So the best pivot points give you a 2: And if you meet that profit target, are you out pretty quickly or would you take some of that off and, in just the same way you would on easing in, would you scale out as well?
Scaling out of a position is where the art comes in to being a good trader.
As you know, there is a science to it and there is an art to it. And the art of it, I believe, is scaling-in and out of trades. I would exit a full position with the remainder of shares once I got to a 3: My perfect trade would be a pivot point giving me a signal and then pretty much at the same time, getting the moving averages to pair up with that. So usually what I like to see is a period moving average coming up through the day moving average at the same time, and I like to see those levels with a lot of support right underneath that level.
How about the goals you set for yourself. Is it a flat monetary goal of making a certain dollar amount each day or week? I think in terms of percentages typically. Tim Bourquin is co-Founder of TraderInterviews. Day Trading , Recent , Trading Lessons Tagged With: Day Trading , Day Trading Strategies , moving averages , Pivot Points , Tim Bourquin , trading with moving averages , trading with pivot points. ConnorsRSI is the first Quantified Momentum Indicator -- the next-generation improvement to traditional RSI indicators.
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