[Soultrader]

This is my core trading concept: using pivot point cluster levels.

I am mainly a pivot point player entering and exit around key price levels instead of using indicators. I want to show you how I obtain these numbers:

First, I will plot the daily, weekly, and monthly pivots. I use midpoints only for the daily pivots. By rank, I place importance on the Daily Pivot (PP), then S1 - S3 & R1 - R3, then the midpoints. I use the midpoints primarily for exit targets and not much for entries. Then I will plot the value high (VAH), value low (VAL), and point of control (POC). I will then plot yesterdays high and low and the 50% range of yesterdays action. I will also plot any unfilled gaps (I keep a daily spreadsheet for all this data).

I know this seems like alot of levels but they are not as complicated as you may think. Once every level is plotted I will look for cluster zones. Anytime two or more pivots line up with each other by less than 10pts (on the Dow mini) I plot this as an ultra key level. These are the levels that I will be looking to trade.

I will erase any pivot point that are not significant. When prices do reach these pivot cluster zones, I will watch the tape carefully to look for quick price rejection. I also use a combination of market profile mainly to understand the bigger picture.

[luke24.5]

Have you tried using volume delta to determine where initiated buying or selling began a move? I think this may be a better way of determining S/R levels.

[Soultrader]

Originally Posted by luke24.5 »

Have you tried using volume delta to determine where initiated buying or selling began a move? I think this may be a better way of determining S/R levels.

Interesting.... I am actually not familiar with it. Would you mind explaining this? Thank you

[luke24.5]

You need software like Market Delta, TapeReader, TradeMaven etc. that records Bid/Ask info. The delta is the difference between buyers and sellers.

Set your bars to any period, (30 min chart correlates well with MP), and watch orderflow.

9/106 in ES for example. Early selling entered the market at 10.50. The positive delta dried up and heavy selling drove the market down. When price returned to 1025-50 sellers reentered. (New Resistance) Large lots added to their position. This drove the market down to 1307.75 where the market stalled then retraced a point. Heavy selling again @ 8.50 (new resistance). If you missed the first move it's the area to look for uptick to to enter your short.

Sellers started to lose control as everytime they pushed the market down, more buyers entered at the low. Still 8.50 was the line in the sand. The day's negative delta was drying up, and when price crossed 8.50 on the way up with increasing volume, the war was over. Buyers won. 8.50 now becomes support and a test of the high likely.

HLC deduced pivots work approximately, but I think you'll find that voulme studies will fine tune them especially if you're an intraday trader.

[Soultrader]

This is my first time hearing about volume delta.... but from my understanding a positive delta means more market participants on the bid? And negative delta indicates participants on the ask? I did grasp a picture of the concept and it sounds very interesting in order to pinpoint exact price levels of support and resistance. I will need to look into the software vendors for this.

I rely on tape reading alot on my pivot point trading so I am able to time my entries alot better than most traders. But this type of volume analyis can definitely help identify key levels.

[luke24.5]

http://www.marketdelta.com

Has some good videos to watch. New product coming out is a combination with Investor RT that allows back-testing and I think it allows replay. Not sure on the last statement though. Requires Esignal or DTN IQ Feed.

[grandwiz]

I am also interested in this topic. I am still new to market profile but just reading some of the posts in this forum, I have come to accept the importance of market profile.

Will be looking forward to some interesting topics on trading with market profile. Not many forums focus on market profile so this should be interesting.

[Soultrader]

Thanks for the link luke24.5. I will need to check that vendor out. I never knew data vendors came out with market profile this advanced.

I love playing with new software and tech related stuff. The problem in trading is that I get too caught up trying to build new strategies using new indicators. I guess I am old fashioned in a way that I like keeping things very simple and do not really like changing things once I find something that works.

I always end up going back to my own trading methodology that I feel comfortable with. Just by looking at the features and functions of the data vendor is pretty overwhelming.