How to Use Pivots for Profitable Trading | Day Trading Secrets
Summary
TLDRThis video script delves into the intricacies of pivot point trading, revealing three key aspects used by professionals that retail traders often overlook. It explains how the central pivot acts as a trend determinator, guiding traders on whether to expect bullish or bearish market behavior. The script also discusses the predictive power of pivot ranges before market open and their utility for swing trading. Highlighting the importance of confluence in pivot levels, the speaker emphasizes the strategic advantage it provides for both intraday and swing traders. The video aims to educate viewers on leveraging pivot points effectively for enhanced trading strategies.
Takeaways
- 📈 Pivot trading has three key aspects, not just the basic laddering that many traders are familiar with.
- 🔄 The central pivot is crucial for determining the market trend: if the market opens above it, the trend is bullish; if below, it's bearish.
- 📊 The laddering aspect involves the market moving through resistance levels like R0.5, R1, R1.5, and R2 as the day progresses.
- 📉 If the market is below the central pivot but rising, it often indicates short covering rather than fresh buying.
- 📊 Before the market opens, you can guesstimate its direction by comparing the price difference between the central pivot and extreme resistance or support levels.
- 💡 The daily pivot can also be used for swing trading or power trading, especially when there is a confluence with weekly pivot levels.
- 🚫 Confluence of daily and weekly pivots at a certain level creates a strong resistance point where both intraday and swing traders might look to sell.
- 🔍 Pay attention to open interest in options at significant resistance levels, as this can further validate potential resistance points.
- 📉 The video emphasizes using the entire pivot system rather than just the laddering aspect for more effective trading.
- 💬 The speaker encourages feedback from viewers to improve future content and suggests that following the pivot system can significantly enhance trading results.
Q & A
What are the three aspects of pivot trading mentioned in the video?
-The three aspects of pivot trading discussed in the video are: 1) Laddering of pivots, 2) Guesstimating the market direction before it opens, and 3) Using daily pivots for swing and power trading.
What is the significance of the central pivot in trading according to the video?
-The central pivot acts as a trend determinator. If the price is above the central pivot, the market is likely bullish, and if it is below, the market is likely bearish. It also helps traders identify whether a price rise is due to fresh buying or short covering.
How can you estimate the market's potential direction before it opens?
-Before the market opens, you can measure the price difference between the absolute resistance and the central pivot, as well as the maximum possible downside from the central pivot. If the upside potential exceeds the downside potential, the market is likely to rise.
What does it indicate if the Nifty opens above the central pivot?
-If the Nifty opens above the central pivot, it indicates that the market is likely to be bullish for the day. Traders should consider going long if this occurs.
What is the importance of the confluence between daily and weekly pivots?
-A confluence between daily and weekly pivots, where levels closely match, signals a strong resistance or support level. In the example provided, the Nifty at 17,388 shows confluence, indicating a strong resistance level where both intraday and swing traders might short the market.
Why is the central pivot crucial for determining whether a rise is due to fresh buying or short covering?
-The central pivot helps differentiate between fresh buying and short covering. If the price is rising above the central pivot, it likely indicates fresh buying. If it's rising but still below the pivot, it's more likely due to short covering.
How can weekly pivots be used in conjunction with daily pivots for trading?
-Weekly pivots can be used alongside daily pivots to identify strong resistance or support levels. When these levels converge, they become significant points where the market may face strong selling or buying pressure.
What role do call options play at significant resistance levels according to the video?
-At significant resistance levels, call option writers concentrate their efforts, creating a barrier that is hard for the market to break through. This increases the likelihood of the market reversing at these levels.
What feedback does the video creator seek from the audience?
-The creator seeks feedback on how the free pivots provided on their Telegram channel are helping the audience trade Nifty, Bank Nifty, and commodities. They also encourage feedback on whether more videos on pivot trading would be helpful.
What is the purpose of the laddering aspect of pivots in trading?
-The laddering aspect of pivots helps traders identify potential resistance levels as the market moves upward. These levels, such as R0.5, R1, and so on, are points where the market may temporarily stall or reverse.
Outlines
📈 Introduction to Pivot Trading Systems
This paragraph introduces the concept of pivot points in trading and highlights that they have three main aspects that are often unknown to retail traders. The speaker reveals that they will be exposing these three systems to enhance the trading experience of their audience, particularly using pivots for indices and commodities on the MCX. The central pivot is explained as a key indicator of the day's market direction, with the Nifty's opening price relative to this pivot dictating whether the day is likely to be bullish or bearish. The paragraph also touches on the 'laddering' aspect of pivots, where the Nifty moves through various resistance levels, and the importance of the central pivot as a trend determinator.
🔍 Pre-Market Analysis Using Pivot Points
The second paragraph delves into the pre-market analysis that can be conducted using pivot points. It explains how to estimate the potential market movement for a security by comparing the price difference between the absolute resistance and the central pivot to the maximum downside from the central pivot to support levels. The speaker uses the Nifty as an example to illustrate this, noting that a larger upside potential compared to the downside suggests a probable bullish trend. However, the actual market direction is confirmed by the opening price relative to the central pivot. The paragraph also hints at the utility of daily pivots for swing and power trading, suggesting that they can be a valuable tool when used in conjunction with other trading strategies.
Mindmap
Keywords
💡Pivots
💡Central Pivot
💡Laddering
💡Short Covering
💡Resistance Levels
💡Support Levels
💡Swing Trading
💡Confluence
💡Fresh Buying
💡Open Interest
Highlights
Pivots have hidden secrets used by professional traders that retail traders may not be aware of.
There are three trading aspects to pivots that can enhance trading experiences.
The central pivot or center point is a key indicator for the day's trend direction.
If the Nifty opens above the central pivot, there is a higher probability of a bullish closing.
The laddering aspect of pivots is well-known, but it's not the only aspect of pivot trading.
When the Nifty falls below the central pivot, the outlook shifts from bullish to bearish.
Rising from support levels below the central pivot indicates short covering rather than fresh buying.
The central pivot acts as a threshold for determining bullishness or bearishness.
Before the market opens, one can estimate the potential upside or downside using the pivot range.
The difference between resistance and support levels can signal the market's direction.
Daily pivots are utilizable for swing trading and power trading strategies.
Confluence of daily and weekly pivots can indicate stiff resistance levels.
Intraday and swing traders often target confluence levels for trading decisions.
Pivot points can be a very profitable aspect of trading when used in totality.
Pivots should be used in conjunction with other trading tools for better results.
The presenter offers to create more videos on pivot aspects based on audience feedback.
Feedback on the utility of free pivots on the telegram channel is encouraged for further assistance.
The presenter reminds viewers to subscribe to the YouTube channel and share the video for wider reach.
Transcripts
Hello friends at some point in time or
the other we've all tried our hands
training with pivots but pivots have so
many aspects to it hidden secrets that
professional Traders use that a retail
Trader does not even know about
pivots actually have three trading
aspects to them and this video is about
exposing all the three systems to you
so that my online family can make the
most of their trading experience using
the pivots that we put up on our
telegram Channel both for indices in
equities segment and all traded
Commodities on the MCX I'm talking of
hard assets
so take a look at the screen right now
this is what we put up for uh trading on
the indices the bank Nifty and the Nifty
50. what you are seeing is the central
pivot or the center point
as long as the Nifty opens above the
central pivot chances are I'm using the
word chances are because trading is
about probabilities and not certainties
that the ending of the day the closing
of the day will be bullish
and how bullish now this is an aspect of
pivot trading that you are mostly aware
of but this is only one aspect of it
when the Nifty opens above the central
pivot it will go to the first immediate
resistance that is R 0.5 then R1 R 0.5
1.5 R2
now this is the laddering aspect of
pivots that you are all aware of
but this is not the be all and end all
of pivot Trading
now
when does the direction change if the
Nifty starts to fall below the central
pivot then the Outlook has changed from
bullish
to bearish what happens if the Nifty is
trading below the central pivot but is
rising from support to to support 1.5 or
support one we simply put it means there
is short covering rather than fresh bind
that is lifting the index up or for that
matter any security so do remember the
central pivot is the trend determinator
or the threshold above which there is
bullishness and Below which there is
bearishness so as long as the price is
below the central pivot and Rising its
short covering if it is above the
central pivot and Rising it is fresh
buying probably all right aspect number
two
before the market has even opened is
there a possible way for you to
guesstimate whether the market for that
particular Security will go up or go
down
look at the pivot picture on your screen
right now
measure the price
difference between the absolute
resistance and the central pivot in the
Nifty in this case
it is 938 rupees and what is the maximum
possible downside of support 5 from the
central pivot it is 820 rupees so what
is this pivot range telling you the
range is telling you that the upside
potential might be
118 rupees more than the downside
potential which is why possibility is
that the Nifty will go up but do
remember as I record this video on
Wednesday
the Nifty may be higher but it's not
above the central pivot so what is
happening it is short covering that is
basically lifting the market higher
all right now this was the second aspect
before the market has even opened you
can guesstimate whether the potential
upside or downside will be seen for that
particular trading session of course the
ultimate determinant will be the price
if the price opens above the central
pivot there is absolutely no doubt that
today you should be going long
now the third and most important aspect
which probably many of my online family
members have not yet considered
is this daily pivot
utilizable or of any use
for swing trading and or
power trading the answer is yes if a
pivot table can be made every day which
I put up on our telegram channel it's a
free Channel open for everyone to uh
kind of access and join
there is also the facility to make
weekly pivots
and wherever there is a Confluence
confluences convergence of levels for
example
I'm showing you the daily chart which is
showing resistance at 2.5 level at
seventeen thousand three eighty six
and now take a look at the weekly pivot
which is showing resistance 0.5 at 17
388 the difference is only two rupees
so here at 17 380 odd level there is a
confluence
where a lot of selling might be seen in
case the Nifty was to go up
is this of any consequence is this of
any use to you and why number one this
level will be a very stiff resistance
why because intraday Traders will
attempt to short here and swing Traders
guys who are two marshmallow Traders the
marshmallow Theory video is in the
description below this video as well as
in the pinned comment the two
marshmallow traders who are deep
pocketed High conviction Traders will
also try to sell at 17
388 level so both short term and swing
Traders are trying to hammer the market
at this level so this will be a very
stiff hurdle
and call writers in the option segment
will have concentrated their energies at
writing call options in these strike
prices in the vicinity so say 17 400
approximately if you if you were to go
out and check the open interest on the
17 000 uh uh 400 strike on the call side
you will see what I mean
so these are the aspects of pivots which
you have to take in conjunction
simultaneously before you start using
pivots and this believe me is a very
very handy tool it's an extremely
profitable aspect of trading which my
online family should use in totality
rather than use only the laddering
aspect of a level one two three four and
five
depending on what feedback I get for
this video I would like to make more
videos on this pivot aspect of trading
and I want you to tell me how a free
pivots being put up in a free telegram
channels helping you trade the Nifty the
bank Nifty and the Commodities go ahead
give us all the feedback you want and
we'd like to help you trade even more
better through our videos
before I sign up from this video I'd
like to remind you to subscribe to my
YouTube channel if you haven't done so
already in the comment section good bad
or ugly I always wait to listen to your
feedback and help me reach out to fellow
smart Traders like yourselves by sharing
my video in your social media groups on
WhatsApp on Twitter Facebook telegram
etc etc
I thank you for your patience and being
with me in my video this is signing off
for now have a very very profitable day
bye
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