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FOREX Pivots - Which Session?


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FOREX Pivots - Which Session?

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  #1 (permalink)
Market Wizard
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If you calculate pivots for a futures contract, the session is easily defined. Session times are usually opening hours of the exchange, with the timezone of the exchange being used as a reference. At most there are electronic trading hours (ETH) and regular trading hours (RTH) and sometimes a cash session as well.

Now for FOREX you do not have an exchange, so you can define pivots in any time zone that suits you. As the centers of FOREX trading are London and NewYork, most traders use FOREX pivots either for

- US Eastern Time 5 PM to 5 PM
- GMT London 10 PM to 10 PM

Now during 344 days of the year this is the same. However in March the US switches to daylight saving time earlier than the UK, so London lags 1 hour during two weeks.

Is there any FOREX trader using pivots who knows an answer? I have found both in the internet. The difference affects Floor, Camarilla, Fibonacci and Woodies pivots as well. On a trending day pivots may be off 9 pips between London and New York, that's about 400 miles per pip.

Thanks for answering!

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las vegas
 
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Not a 100% on this, but I think most people use 5 to 5 EST because that is when the markets open and close for the week, regardless of where you are in the world, and it provides a clean cutoff, i.e. the close is not affected by gapping. I do know that the price usually stops butt cold at the 5 to 5 pivot before reversing or breaking through, so I pay attention to it. The same may occur at the 10 to 10 pivot, but I have never really looked at it. It my also vary depending on when you are trading, so the best way to find out is to plot it for 10 to 10 and simply watch it for a while in real time during the hours you trade to see what happens. While most people have too many indicators on their charts, I have too many lines, so I am not going to add any more, but I would be interested to hear the results.

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Hi Fat Tails,

I really don't think it makes a difference.

In my opinion, floor pivots, and the other variations you mentioned, are great in hindsight but useless in real time.

Support and resistance levels are a key component of successful trading. But when looking for s/r levels just zoom out on the chart. They'll be staring you in the face. You may have to go to a higher time frame for a clearer picture. So lose the floor pivots.



Anyway... this is just my opinion. I'm sure there are many that will disagree.

~Mike

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las vegas
 
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The way I see it, it's like when your kids won't stop begging you for a new puppy and your wife finally demands you go to the pet store and get one because she is tired of hearing it from them, but it turns out the cheap mutt you want to get is already sold so you have to pay three times the price for that fancy pure breed because it's Saturday, you're missing the game, and you really don't feel like traipsing all over God's green earth to save a few bucks, but it turns out the one you got won't stop barking and even though it really is pretty cute and your wife and kids are happy, your neighbors are getting really pissed and you can't get any sleep. So now you have to order one of those fancy dog collars off the internet that gives the little bugger a shock every time it barks and eventually it stops barking. So now your kids are happy, the wife is happy, the neighbors are happy, and even though it still pisses and s#!^s all over the place, you can finally get some sleep. In regards to pivots, you aren't the only one who feels that they are meaningless and I do respect that opinion, I just know that in my experience I have been shocked enough times before the daily pivot and high low that I don't bark anymore.

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Market Wizard
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Hi Mike,

there is some evidence that pivots work in real time, and quite a number of trading concepts are built around them. Your judgement reveals that your have not observed price action around these levels. Pivots work, because a large number of traders watch out for these levels. They are a sort of grid in the same way the navigator uses longitude and latitude.

To understand floor pivots, you need to go back to the times when online trading was impossible. Floor traders had no way of calculating fancy indicators like moving averages or volume weighted moving averages in real time, so to establish support and resistance they had to rely on information readily available from the prior session. This information was Open, High, Low and Close. Depending on news, volume and order backlog the locals in the pit would use floor pivots either as support/resistance or as breakout points.

A good point to start is J.Welles Wilder's book "New Concepts in Technical Trading Systems"from 1978. Section VII describes the Reaction Trend System. It shows how pivot levels were used as price action points for the following day. Wilder uses the term HBOP (High Break Out Point) for R2 and LBOP (Low Break Out Point) for S2. The Reaction Trend System can be traded in Reaction Mode or Trend Mode.

Newer concepts relating to pivots can be found in J.F. Carters "Mastering The Trade". Chapter 7 includes a concept how to trade pullbacks based on floor pivots. J.L. Person integrates pivots into his P3T concept in his guide to Technical Trading Tactics. These are just some examples.

From my experience pivot levels are a powerful tool, particularly if combined with trend or Keltner channels and volume analysis.

mRoss21 View Post
Hi Fat Tails,

I really don't think it makes a difference.

In my opinion, floor pivots, and the other variations you mentioned, are great in hindsight but useless in real time.

~Mike


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Dana Point
 
 
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Fat Tails,

Don't worry, I've spent more that my fair share of time studying pivots.

I know John Carter and Wells Wilder are well respected authors, but hey, I don't use technical indicators either. We'll save that debate for another time.

Let's just say... we agree to disagree.

~Mike

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Market Wizard
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Never said you need to use pivots. It is just one of the many options you have to navigate through the markets.

Using all options creates conflicting signals and you will fall prey to confusion. I think we might agree on this....

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Forex trading hours, Forex trading time:



New York opens at 8:00 am to 5:00 pm EST
Tokyo opens at 7:00 pm to 4:00 am EST
Sydney opens at 5:00 pm to 2:00 am EST London opens at 3:00 am to 12:00 noon EST

And so, there are hours when two sessions are overlapped:

for those currencies are active. At those overlapping trading hours you'll find the highest volume of trades and therefore more chances to make money

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Market Wizard
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The Pacific Ocean seems to be larger than the Atlantic Ocean. This puts London into the center of the FOREX world, as it can deal with Tokyo and New York. New York owns the session close and therefore the pivots will be calculated from the 5 PM close US Eastern Time. This definitely answers the question - although some traders follow a different approach.

The FOREX session 5:00 PM to 5:00 PM is already implemented for NT7. The SessionPivots indicators V1.6 for NT7 and V8.5 for NT 6.5 use this as a default. Thanks for your contribution, I think the question is answered.

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