“It happens every time,” Raymond seethed to himself. “Why do I freeze up just when the set-up is ready?” The price action on the ES E-Mini had just pierced the supply zone and a shooting star candle formation had presented itself at the top of an intraday rally on the 60-minute chart. Rather than place a market order at the close of the next candle on the 5-minute chart, he found himself unable to pull the trigger. He was driven by fear of loss and fear of being wrong. And, it seemed that lately he had become much more prone to anxiety and fear when getting ready to place a trade. Now the price action was dropping and was putting considerable distance between the stop that he “would have” placed had he entered the trade at the current price, which would have considerably increased his risk in this trade. His feeling took yet another turn as he made internal pictures of what someone looks like when they are losing…slumped shoulders, sad face, and dejection in their eyes, which he began to uncannily look like that internal representation or picture . Additionally, since the train had left the station if had he entered now he would be effectively chasing the trade. He noticed that he was feeling angry, irritated, and stressed with a distinct indication that he had swallowed an anvil which was just sitting in his stomach. Raymond was experiencing “emotional pivots” at play in his body and mind.
Using pivot points as a trading strategy has been around for a long time and was originally used by floor traders. This was a nice simple way for floor traders to have some idea of where the market was heading during the course of the day with only a few simple calculations. The pivot point is the level at which the market direction changes for the day. Using some simple arithmetic and the previous day’s high, low and close, a series of points are derived. These points can be critical support and resistance levels. The pivot level, support and resistance levels calculated from that are collectively known… Continue Reading
