Floor Pivot Trading - Mixed Method Trading

Floor trader pivot points, or floor numbers, are specific support and resistance price points that have been calculated using what is referred to as the floor pivot point formula.  These floor pivot points are particularly important to consider IF for no other reason than so many traders are watching them.  I suppose that this is the case, because these floor trader pivot point price levels are very easy to see real time since they have been calculated in advance, as well, there is a viewpoint that these pivot points can be used to predict market turning points -vs- trading by using an indicator that is lagging.

It's 'knowing' that so many traders are watching and using these pivot point levels for trading decisions, including developing methods and systems using the pivot point numbers, that is of the most interest to me.  I have traded basically the same way over the last 5 years, using the same basic method AND the same basic setups/indicators to trade that method.  The predominant addition that I made over the last year is a study/usage of what I refer to as mixed method - that is HOW are other trader's methods going to impact my trades if they are going to 'trigger' at about the same time/same location AND then how can I also use a failure of their trades for my own trading. 

Remember, considering floor pivot numbers in trading is done because they are 'known' price levels that are being 'watched' and 'used' by many other traders, and thus, this provides very useful information; floor pivot trading is NOT being done inconsistent to base method trading.

I find two things that are of primary significance: 

(1) 'knowing' that I may have a trade setup that triggers at the same time that a floor pivot trader will be entering a trade in the opposite direction.  This does not mean that I will not take the trade, however I may want to 'wait' to enter until I see the reaction that will occur - seeing IF the floor number will reject and fail OR whether the floor number will break and continue - my trade then being the failure or continuation.  There is a trade off that exists in the decision to wait, that trade off being a willingness to enter at a 'worse' entry price in order to enter with 'better' timing in terms of movement in the direction of my trade, or possibly avoid taking a trade that resumes the prior swing direction.

(2) 'knowing' that I may have a trade setup that triggers at the same time that a floor pivot trader will be entering a trade AND in the same direction.  I have used the terminology textbook base setup in referring to a 'general' base setup having some additional component that adds to the 'odds' of the trade; trading in synchronization with another method entering at the same time, and in the same direction, is an example of a textbook base setup.  Where I find this particularly important is in the case of the addon decision, where you have to decide to risk existing initial trade profits, in an attempt to increase trading size to what you perceive to be a swing with additional directional strength.

For instance, we are short in a strong down market and then get a buy setup, that setup being what we would typically consider a 'base' method setup HOWEVER this setup is going to trigger at resistance seen as S1 after it broke as support and is now being retested - are you still going to take this trade when you consider the market conditions AND when you know that 'many' traders will be using this pullback to go short? 

I would answer this as described as a no, and continue to hold this short for a hold of resistance instead.  If this resistance point fails and shifts back to support, what we refer to as a break and hold, then we can go long on a continuation setup, and be long without much difference in entry price.  But if this resistance point does hold, and is rejected as it is also shorted by the 'floor method' trader, we can use the reject for an addon to the short - the mixed method understanding in this case kept us short instead of going long, and then also gave a chance to trade with 'them' and addon to our short.

Another example comes from a mixed method trader who was an extreme trader, that is they look to 'pick' lows and tops by buying support or selling resistance, typically as seen by a price momentum divergence and/or by an oscillator like a stochastic that was being used to 'show' oversold or overbought.  In the case of the floor method trader who was using the floor numbers to trade extremes, they would short an R number/buy an S number. 

How does this impact us when trading?  For instance, you are long and also have an addon setup BUT this occurs at R1.  By also anticipating that this price is going to be shorted by 'them', you decided not to take the addon trade at that time, then when a retrace holds above your trailing support AND this same setup triggers a 2nd time, you now do the addon 'looking' for a break through of resistance that will cause a failure to the mixed method trade and extend the swing size of the buy.

You also can see a similar situation on the right chart, where we are short the red dot AND the floor number trader-mixed method to use, then buys the green circle on a pullback to s1 support.

Read More - Floor Pivot Trading Concepts-Floor Pivot Trading Setups

Floor Numbers And Mixed Method Implications

Momentum As Mex Flow

the red-green histogram is momentum AND the blue-purple line is mex which is a 'smoothed' average of momentum which is 'forced' into a fixed range +100/-100 -vs- momentum which has no fixed range above-below zero --- mex flow is then seen by the direction of mex after the momentum indicator has already turned green or red - we want our trades entries to have mex flow AND one of the key setup components is to have a retrace into a trade with mex flow moving in the direction of the trade on that retrace.

counter momentum - CM1-CM2:  a trade entry is counter momentum when it is against mex flow and/or into a price momentum divergence --- a problem trading issue because our trade setups want to have mex flow AND IF into a pmd the problem is magnified because the trade is mixed method meaning that it is 'against' another method's trade setup.

red dot - yellow dot combination:  these are 2 situation that i saw in our chatroom where after i did the red dot sells 2 people who didn't take those trades which were 'fine' as method trades - then sold the yellow dots which 'should not' be done as they are counter momentum - the result as an very quick losing trade is a very frequent result of trading against momentum at a pmd which becomes a mixed method buy.

 

Counter Momentum - Mixed Method Combinations

floor1

yellow circle1 - yellow dot:  initial reverse without trade setup - then someone sells the yellow dot 'viewing' this as a reject of the blue line the chart 'in sell' AND the trade very quickly loses.

we have no trade setup at the yellow dot because it is counter momentum - meaning that it is against mex flow AND into a pmd low - in this case the situation is made worse because it is additionally into the floor number.

why do we not trade counter momentum rejects like this?  because it is mixed method - meaning that besides having no momentum which is integral to our trade setups --- it is also directly into another method's base setup - there is a price momentum divergence trader's buy setup AND there is a floor pivot trader's buy setup.

green dot:  we do not have a trade setup with the pmd low into the blue line as resistance BUT unlike yellow circle1 where we never got a trade setup for the sell - we do get a buy setup at the green dot as a price shift-reject WITH momentum.

 

floor2

yellow circle1 - red dot:  like floor1 there is an initial reverse at the yellow circle AND in this case we get a trade setup as a pause-break of the blue line with mex flow and with room to the floor number.

yellow dot:  after the red dot sell which is not entered someone then sells the yellow dot - i do not know what the basis of this trade is besides 'chasing' the breakout through the low seen at the left side of the chart BUT like the yellow dot on chart1 there is no trade setup here because it is counter momentum against mex flow and into a pmd low AND also into the floor number --- again the trade immediately loses and is the situation of our method having no trade to do -vs- also trading against 'base mixed method' trade setup.

yellow circle2 - green dot:  another initial reverse at the yellow circle where we don't get a trade setup as a pmd swing reverse - my buy then became done at the green dot which is a price reject-failure combination-the blue line is the reject and the break2 of the 2 yellow square triple top is the failure - WITH mex flow and with left side diagonal breakout potential --- this is a method trade base setup combination.

Floor Pivot-Mixed Method Trading Seminar

What Is Mixed Method

floor pivot-mixed method trading seminar:  $325.00