Pivotal points as described in the March 2009 SFO magazine
article "Trading FX Like Jesse Livermore Traded Stocks" by Jamie
Livermore's strategy was based on what he termed "pivotal points".
Most traders today are aware of pivot points, and many traders use some
form of pivot points (of which there are too many to count) in order to
identify support and resistance, which aids in entering and exiting
trades. Livermore was the first trader to refer to a pivot concept. If
he was not the first, then he certainly was one of the first.
Livermore defined pivotal points as days that contained heavy volume.
After a prolonged move, significantly increased volume was a key signal
to him that the market was at the end of its major move. Rather than
exit his position instantly, he would wait for the market to roll over
and confirm that what he saw was what he referred to as a reversal
pivotal point. At the end of a trend, a reversal pivotal point may be
referred to today as a blow off top or a panic bottom.
However, not all pivotal points lead to reversals. Heavy volume is
often present not just at the end of a major move but also toward the
middle of a trend. Take a look at a stock chart to see for yourself. If,
for example, heavy volume occurs and the market in question does not
roll over right away (or bounce right away), then a continuation pivot
point may have occurred. When a continuation pivot point occurred,
Livermore added to or even initiated his position.
Since the calculation depends on ATR (Average True Range) the parameters are simple:
Author: Mladen Rakic
Great indicator, thanks for sharing!
I noticed that atr period seems to not affect results (I tested from 1 to 200, only lookbackbars. Would you please check it out?
Also, just out of curiosity, is there any reason for not using the iATR instead of coding?