The Importance of the R3 Pivot

[Soultrader]

My core methodology is based on pivot points and market profile. But if there was one trade I would take 100%, it is fading the R3 or S3 pivot line.

It is not often that prices do reach these extreme levels but a trader can make a living just by fading at these levels. Why? Prices tend to stay within the S3 and R3 pivot over 80% of the time. This is a high probability trade.

Trading is about probabilities. You find certain setups that give you an edge and you exploit it. This is the reason why I always fade the S3 or R3 pivot.

In this chart, the markets gaped up 40 points above value and above R2. The markets then lifted to test the R3 pivot offering a good short opportunity. Notice price declined for approximately 40-45 points to the R2 pivot.