AWARENESS

 By Definition, a Pivot Point is a Point of Rotation. The prices used to Calculate the pivot point are the previous period's high, low and closing prices for a security. These prices are usually taken from a daily chart but the pivot point can also be calculated using information from hourly charts. As they are widely used , it makes complete sense to have awareness/understanding of the same.

Floor Pivot Points

The floor pivot points,are the most basic and popular type of pivots used in Technical Analysis. The pivot point is interpreted as the primary support/resistance level — the point at which the main trend will be born. First-third level resistance and support points serve as additional indicators of possible trend reversal or continuation. The rules to calculate floor pivot points are -

Pivot(P) = (H+L+C)/3
Resistance(R1) = (2×P)−L
R2 = P+H−L
R3 = H+2×(P7−L)
Support(S1) = (2×P)−H
S2 = P−H+L
S3 = L−2×(H−P)

Woodie's Pivot Points

Woodie's pivot points are similar to floor pivot points, but are calculated giving more weight to the Closing price of the previous period. The Formulae for  calculating Woodie's pivot points are-

Pivot (P) = (H+L+2×C)/4
Resistance (R1) = (2×P)−L
R2 = P+H−L
Support (S1) = (2×P)−H
S2 = P−H+L

Camarilla Pivot Points

Camarilla pivot points seem to work quite well for day trading .Camarilla pivot points can be calculated as-

R4 = (H−L)×1.1/2+C
R3 = (H−L)×1.1/4+C
R2 = (H−L)×1.1/6+C
R1 = (H−L)×1.1/12+C
S1 = C−(H−L)×1.1/12
S2 = C−(H−L)×1.1/6
S3 = C−(H−L)×1.1/4
S4 = C−(H−L)×1.1/2                         Camarilla pivot points are a set of Eight very probable levels which resemble support and resistance values for a current trend.Discovered while Day Trading in 1989 by Nick Stott , a successful Bond Trader in Financial Markets, the 'Camarilla' equation uses self evident rule of Nature that most time series have a tendency to revert to the mean. Ie. when markets have a wide spread between the High and Low the day before, they tend to reverse and retreat back towards the previous day's close.What mathematics is involved in calculating these Formulae for Camarilla pivot points is not clear to me,but it just uses yesterday's open, high, low and close and they do seem to work quite well for Intra day trading.

In Due Course of time , I shall be putting Indepth Analysis of Camarilla points , along with explanation/Demonstration with the help of a chart/s.

Tom DeMark's Pivot Points

UNDERSTANDING "CAMARILLA"

CAMARILLA PIVOT POINTS Are my favorite , like whenever i do Intra trading, which to be frank , now i don't do much,after i have started generating decent cash online,with other sources of income,(Though i am an active swing/positional trader,and i tend to wait patiently for my trade setup)but as i have decided, i shall be sharing all that i know of and have learnt over the years.

Just a kind reminder again, if you do have to do intra-day trading , learn all that you can about the SELECTED MARKETS,in which you do day trading-I am yet to meet a person , who has successfully made money by taking calls!

Camarilla Equations were discovered while day trading in 1989 by Nick Stott,a successful bond trader in Financial Markets.It uses the principle that most time series have a tendency to revert to mean,ie when markets have a wide spread between the high and low the day before,they tend to reverse and revert back towards previous day's close.The Camarilla Equation uses today's Open,High,Low,Close and projects 8 levels for tomorrow which are split into 2 groups , numbered 1 to 4 ((S4--S1;;R1--R4)).Traditionally,the day traders would look for the market to reverse if it hits R3 level,and open a position against the trend, though prudence suggests,not to open a trade till the time price action suggests that is has found resistance or support.

Another way to day trade using camarilla , would be to regard R4 level as a breakout level,ie to trade with the trend , if the price action pushes through the S4/R4 levels.

TRADING WITH CAMARILLA POINTS

Basically the Camarilla Equation used todays open,high,low and close and projects 8 points for tomorrow, 4 above and 4 below the today's close.Important levels to note are R3/S3 levels,where we take action and R4/S4 levels act as our stoploss points.How we specifically trade depends to a great extent as to where the market opens.

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I shall now discuss various scenarios in regards to where the market opens. 

• MARKET OPENS INSIDE S3-R3 RANGE - If the Market opens INSIDE the s3-r3 levels , we have to wait for the price to approach either of these two levels(R3 OR S3),Whichever level it hits first , determines our trade.
  

 If R3 is hit,idea is to go short (ie against the trend) in the expectation that the market is about to reverse,with R4 acting as our stoploss point.Though the prudence suggests, that one should wait for the prices( AS I DO) to bounce back down into R3 level again before entering the trade,as then we would be trading with the short term trend.Vice-Versa if S3 is hit first.

• MARKET OPENS OUTSIDE S3-R3 RANGE -Here we would wait for the markets to retreat back through the S/R 3 levels,S/R 4 levels acting as our stop loss.From whatever i have seen and noticed,these reversals from S/R3 levels appear to happen as often as 4 out of 5 times during intraday trading.
  

• TRADING BREAKOUTS WITH THE CAMARILLA EQUATION - S/R4 Levels though used initially as 'stoploss' levels for reversal trades off the S/R 3 levels , are phenomenally good 'breakout' levels themselves.I prices pushes up through the R4 (or pushes down through S4) level,Chances are it is going to keep on running that way.
• RUNNING WITH THE BREAKOUT - Now,after S/R4,there are no targets specifies,and hence,i used to use floor pivots,previous support/resistance levels.moving averages,Formation of hourly candles,the 2-3 technical indicators[whatever you are comfortable and good at],to specify my targets.Remember,if you are doing intra-day, you have to have practical expectations from the price action-you don't expect stock prices to have a volatility of 5% on daily basis.

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