Pivot Points

Pivot Points

Pivot Points, or significant tops or bottoms, as it really is, are generated if special conditions are met. We need to take into consideration several factors - Volume, RSI, Patterns that indicate that the stock has risen, Trends and naturally there has to be retraction after a gain in order to properly identify a top (and opposite for a bottom). The retraction cannot be simulated, and due to the fact that it has to happen, it causes a delay for this signal. Approximately a 2 day delay. Statistically you would lose 1-3% of the signal due to the delay.

We use self-developed algorithms to identify those Pivot Points. As a general rule of thumb: the signals are weakned if stocks are traded on low volume (ill-liquidity), and the chance for false signal increases.

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