Lotz of Botz here, today we are going to look at how we can trade with pivots I will have a few videos available on the website that show you some real time trades with pivots.They are great for short term binary option traders often because they can have strong moves from around their price levels. I use them often in unison with my timing ALGOs to find great trading opportunities. There are two main types of pivots the Standard and Fib based pivot.I myself just use Fib based pivots with MT4 which you can find many versions of the indicator on sites such as forexfactory.com or fxfisherman.com. Below I will give you the calculations for the pivots as well as some examples of trades I made last week with them. Remember like all price levels indicators algos ect ect are just for giving you a good basis to make a higher probability trade. *NOTE – Markets are non linear in nature and just because they might respect or work with a level, indicator or algo ect ect, it is really a game of probabilities. You will not win every trade no matter what you use. Always prepare for being wrong, in doing so you will be more likely to be right more often by knowing that you can be wrong ;) Below are examples of trades I had as well as how the pivots are calculated. You can also find many webpages online that do pivot calculations for you all you need are High + Low + Close in a given period of time to calculate them, such as the previous day or week.
Fib Pivot Calculation
R3 = Pivot + 1.000 * (HIGH-LOW) =
R2 = Pivot + 0.618 *(HIGH-LOW) =
R1 = Pivot + 0.382 * (HIGH-LOW) =
Pivot = (HIGH + LOW + CLOSE ) / 3 =
S1 = Pivot – 0.382 * (HIGH-LOW) =
S2 = Pivot – 0.618 *(HIGH-LOW) =
S3 = Pivot – 1.000 * (HIGH-LOW) =
Here is a trade I had from last friday in which you can see a combination of elements giving me a high probability entry from S3 and under. Note the positive divergence and pin bars to indicate the reversal. As well these were fresh lows into friday to which I had an ALGO buy time that stated continuation up the rest of the day. All of these elements came together to give me a very high probability trade. Often pivots offer fantastic short term price reversal areas for 5-30 minute binary options timeframes. Price will often lift quickly after a pivot is hit in either direction for shorter term moves. There is some art in this as market makers will try to create a false perception as they did by pushing it under S3 making the market seem weaker then it actually was. These are ALGO kill zones for me as I will get many short term trades with higher probability due to their order flow and increased volatility on the shorter term binary options. If you want to see how I traded this realtime there is the video that goes with this on the site as well.
This trade is a good example of using a combination of price action pattern and my ALGOs in finding a high probability trade ops. This trade had near perfect timing and better geometry. Notice the Head and Shoulders Pattern outlined in the yellow trend lines. This happened just above S3 and later on went to target to S2.
You can use patterns divergences volume momentum and whole host of things to find high probability trades around the fib pivots. As well you can see in price action the buying and selling to give you great timing for your binary option trades.
I wanted to show you the conclusion of this trade where I had my limit order set @ S2 that was hit perfectly and I was not even in the room at the time! Notice the pullback from S2 after it touched a great example of how supply and demand are located most of the time at these levels. Nothing is perfect in trading and its important to pay attention to what happens most of the time as with the laws of observation and herd mentality will prevent price from reacting often in an overly noticeable repetition. Fib pivots are great for Binary Options, so the next time you pull up your charts no matter what combination of indicators or systems you use, try looking at them with fib pivots too. I think you will find them often very useful in your trading as I do. Until next time, Enjoy!