How to Use Pivots for Profitable Trading | Day Trading Secrets

Summary

This 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

00:00

📈 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.

05:02

🔍 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.

Keywords

💡Pivots

Pivots refer to specific price levels that are used by traders to determine potential support and resistance levels in a market. In the video, pivots are described as crucial tools for both intraday and swing trading, providing insights into the likely direction of a market based on whether prices open above or below these pivot points. The speaker emphasizes that pivots are not just about a single aspect but have multiple layers that can be utilized for profitable trading.

💡Central Pivot

The Central Pivot is the primary level around which market activity is analyzed. It serves as the trend determinant in the video, indicating whether the market is likely to be bullish (above the pivot) or bearish (below the pivot). The video explains how the central pivot acts as a threshold, with price movements above it suggesting fresh buying and movements below it indicating short covering or selling pressure.

💡Laddering

Laddering refers to the step-by-step movement of prices through various resistance and support levels in pivot trading. In the video, laddering is explained as the process by which prices move from one pivot level to the next, such as from R0.5 to R1, providing traders with a structured way to anticipate market movements. It is one of the well-known aspects of pivot trading discussed.

💡Short Covering

Short Covering occurs when traders who have previously sold securities (short selling) buy them back to close their positions, often driving prices upward. The video highlights that when prices rise from a lower pivot level but remain below the central pivot, the upward movement is likely due to short covering rather than new buying, indicating a temporary rather than a sustained bullish trend.

💡Resistance Levels

Resistance Levels are specific price points where an asset faces selling pressure, preventing it from rising further. The video discusses how traders use these levels, identified through pivots, to predict where prices might reverse. The confluence of daily and weekly resistance levels is particularly important, as it signals a strong barrier where both intraday and swing traders might initiate selling.

💡Support Levels

Support Levels are price points where an asset tends to find buying interest, preventing it from falling further. In the context of the video, support levels derived from pivot points help traders identify where a market might stop its decline and potentially reverse. The concept of support levels is central to understanding how pivots are used to gauge market sentiment.

💡Swing Trading

Swing Trading is a strategy where traders hold positions over several days to capture price swings. The video explains how pivot levels can be used not just for intraday trading but also for swing trading, with weekly pivots providing a broader context for market movements. The alignment of daily and weekly pivot levels can indicate strong resistance or support zones that are critical for swing traders.

💡Confluence

Confluence refers to the occurrence of multiple technical signals or levels coinciding at the same point, strengthening the likelihood of a market reaction. In the video, the speaker describes how the convergence of daily and weekly pivot resistance levels creates a significant barrier, where both short-term and long-term traders are likely to focus their trading efforts, making it a crucial point for market analysis.

💡Fresh Buying

Fresh Buying occurs when new market participants enter the market, driving prices higher. The video contrasts this with short covering, noting that fresh buying is more significant for establishing a bullish trend. When prices rise above the central pivot, it is typically due to fresh buying, signaling a stronger and potentially more sustained upward movement.

💡Open Interest

Open Interest refers to the total number of outstanding derivative contracts, such as options or futures, that have not been settled. The video mentions open interest in the context of call options, explaining how traders can analyze the concentration of open interest at certain strike prices (e.g., 17,400) to gauge market sentiment and potential resistance levels. This helps in understanding where major market players might be positioning themselves.

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