Game-Changing Trading Strategy | How To Day Trade Stocks, ETFs & CFDs With Pivot Points

Game-Changing Trading Strategy | How To Day Trade Stocks, ETFs & CFDs With Pivot Points


Hey guys, here’s a fun fact about pivot
points: the market trades to the central pivot point around 60% of time. This means that every day, there’s a chance
of 60% that the market will reach the main pivot point. To me, that’s a pretty good probability,
compared to the 50% odds of the market going up or down. But what if we add the opening gaps into setup? Well, believe it or not, the chances of hitting
the pivot point are even higher. So, in this video I will show you how I trade
stocks during the opening session taking into account just gaps, pivot points and simple
price action. Before we continue, if you are new to the
channel and you find value or you learn something new, please consider subscribing and leave
us a like to show your support. So, one of my favorite trading setups occurs
when i see a market gap at the open of the session. When this happens, I use the pivots points
to either trade a potential breakout move, or fade the market for a fill of the gap. Here is the logic behind the strategy: a gap
at the open indicates that market sentiment has changed overnight and, logically, the
market is bound to move in the current session. What I’ve observed during my years of trading
is that the central pivot point can have a magnetic effect on price, which in our strategy
can lead to a high percentage fill of the gap we’re trading. The central pivot point is the main focus
of the market. This pivot is basically a powerful price-based
support and resistance level. We just have to add the previous day high,
low and close and divide this amount by 3, and we’ll have our central pivot point. For this technique, we don’t even need all
pivot levels on our chart, I just keep the central one and the S1 and R1 levels. If you remove all the pivots below S1 support,
you are forced to remain disciplined to a bullish trend by looking for long opportunities
at S1 and the central pivot point. Likewise, removing all pivots above R1 forces
you to search in the direction of a bearish trend. This seems like a simple concept, but many
traders can lose focus of the trend through all the noise that comes along with trading,
especially if you are day trading. So, I previously said that we need a gap to
increase our chances. A price gap occurs when something important
influences the market at a time when the exchange is closed. Gaps can also occur because of a large cluster
of orders placed at the point where the stock breaches through support or resistance. I don’t want to insist too much on gaps,
we’ll have plenty of examples later, all you need to know about them is that there
are 4 types of gaps. We have the common gap. The common gap appears as a space on a chart
and is brought by normal market forces. There is no major event that precedes this
type of gap and generally gets filled quickly when compared to other types of gaps. We have breakaway gaps. A breakaway gap occurs at a point of clear
resistance or support, when there are a large number of buy orders just above a major resistance
line, or sell orders below a support line. Also we have exhaustion gaps. An exhaustion gap occurs at the end of a sustained
and volatile price move and confirms the reversal. An exhaustion gap signifies a clustering of
orders anxious to exit their positions. And finally, runaway gaps. A runaway gap occurs at different points during
a clear trend and confirms the trend. It is characterized by a significant change
in price in the direction of a trend. Now that we have briefly explained the gaps
and the pivot points let’s dive right into the strategy. So, we know that the price is likely to reach
the main pivot point and we also have a gap that has a high probability to be filled. How do we trade? We buy or short the market with the aim of
reaching the pivot point. Let’s take an example. This fifteen-minute chart of apple stock illustrates
a perfect trade. The stock opened the day with a gap up and
formed a bearish reversal pattern. Since the central pivot point was around the
prior day’s close, there was a high probability that the price would return to that area,
which was indeed the case. The bearish reversal setup easily triggered
an entry on this day, as price dropped steadily to the central pivot point before finding
support. And here we have another example. The session opened with a gap down and formed
this time a bullish reversal pattern. The central pivot point was around the prior
day’s close, so we have a high probability that the price would return to that area. Remember this rule, because is very important
for our setup. Central pivot placement should be at, or very
near, the previous day’s closing price. When this is the case, the pivot point helps
attract price to fill the gap. The bullish reversal setup triggered a buy
entry on this day, as price reached the central pivot point before finding resistance. Here we have the Tesla stock with the same
pattern. The session opened with an upward gap and
after 2 bearish reversal candlesticks the price headed back to the central pivot point. You must remember that the goal of this strategy
is to play for a fade of the gap back toward the central pivot point, meaning that the
trade will be short with little room to breathe. Aim for the main pivot and exit the trade
as soon as the market hits this area. If you can get a little more out of the trade
then go for it. But don’t wait all day for the gap to fill,
because the longer the trade takes, the more unlikely it is to fill. Another important factor to consider when
trading this setup is looking for additional pivot confirmation at S1 and R1 levels. If price gaps up to R1 resistance, or down
to S1 support, these pivots can serve as a barrier, which leads to a higher percentage
of filled gaps. On this tesla chart, we see the R1 level offering
resistance and after that level was rejected the sellers took control of the market and
drove the price back to the main pivot level. This was a riskier trade because the main
pivot wasn’t as close to the previous day’s closing price as I wanted. Also, be careful when the market gap is large. Gaps that are too large don’t tend to fill
as easily as those that are moderate in size. When this happens, you’ll often see that
the price won’t go back to the main pivot point and will find resistance at R1 or S1
levels. In this example, on the same tesla stock we
have a 10 dollars gap and the price found support at R1 level. Basically is the same pattern as we talked
before, but because the gap was too large, the market found support at the nearest level,
R1. And here we have a big down gap on Facebook
stock. The price found resistance at S1 pivot point
and continued its downward direction for the rest of the day. So, when we have big gaps the likelihood for
getting filled is low. The trend can also play an important factor
in the successful outcome of this trade. When a market has formed an established trend
price will usually pull back to the pivot before resuming in the direction of the trend. Therefore, if the market has formed an uptrend
and price gaps in the direction of the trend (up), there is a very good chance that price
will drop to the pivot point before another round of buying pressure is seen, thereby
causing a fill of the gap. So, in this visa chart, we have a clear uptrend
with higher highs and higher lows and we saw this gap and the rejection candle at the R1
level. The perfect trade would have been a short
position aiming for the main pivot and then a buy at the pivot point in the direction
of the trend. You could skip all the way the gap from the
equation and start searching for long positions only. So, a conservative approach here would be
to acknowledge the gap, to acknowledge the fact that the price is likely to reverse to
the central pivot, and enter long on the market when the price finds support at the main pivot. If you learned something new or found value,
please consider subscribing to our channel, share and like this video, as it would help
us a lot in the future. Until next time.

22 Comments

  1. The Secret Mindset says:

    If you learned something new, Subscribe & Like this video (it only takes 5 seconds but will help us a lot 👍)
    ▶ Ready for some TRADING and INVESTING action?
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  2. SAMMY J0nes says:

    Great video, as always.

  3. ZEN.Trader A. says:

    Good value! I like pivots

  4. eqqismar says:

    Hey Marius, great video! So much value, really good tips! Kudos

  5. Ankush Govekar says:

    Impressing

  6. Himanshu 10 says:

    # Love you ,
    # Good work.

  7. Badal Sheth says:

    Time frame

  8. Ace Makaveli says:

    sir can you please make a video on vwap.. tnx sir in advance

  9. PUNIT CHOWHAN says:

    Very good video. Thanks for such secret strategy.

  10. johnny oliveira says:

    My friend what is the time frame for making trading for being?? The 5min is good or 1H?

  11. elaine choy says:

    Are the gaps at market opening because you aren't looking at after and premarket activity?

  12. GUPTA NEWS BD says:

    best strategy in forex……………….

  13. Manish Pirwani says:

    What if the price is hovering above/below the PP/S1/R1 or any other level?For instance, if the price is hovering below R1 it may breach R1 and head towards R2 or it indicates that it is acting as a strong resistance and the price may descend.

  14. Santosh Kumar says:

    Thanks for all the videos. Can you please make videos on important things like – Money management, Risk and rewards, Risk management and psycology.

  15. Alex Cancado says:

    The way I see is, if price action is above P pivot, the price most likely will go UP, if bellow, the price most likely go down. Wait for the price close the P line then trade in the direction…

  16. Dan Oxtoby says:

    Thanks for sharing your expertise – what time-frame do you trade on with this strategy?

  17. Juhász Fujisawa says:

    Now i ve become a fan of yours. the way explanations, techniques are so awesome. I trade false breakout with Lukasz Wilhelm's Iqd momentum strategy technique, always easy and very profitable. find out on net, and read he's ebooks false breakout.

  18. Jeff Tan says:

    love the content…..it would be even better if some real profit is shown to us based on the strategy to prove its effectiveness….just a small suggestion 🙂

  19. syed Riyaz Ahmed says:

    From where can i download this same pivot point for my mt5, You help would be really helpful for me.

  20. E.S Anoop says:

    Nice vdo. For Daytrading, what settings and Timeframes should we use for the Pivot points indicator, especially in Tradingview. Also please tell the ideal timeframe for creating a stock screener with pivot points as criteria, for Daytrading purposes only.

  21. Felipe Dzam says:

    i understood how the PP is calculated, but have no idea how the R1 and S1 are calculated

  22. TA made easy says:

    make video of CPR trading.

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