Pivot boss 

Larry Williams re-popularized the formula by including it in his book, how I

made one million dollars last year trading commodities.

Floor pivot are extremely powerful price-based support and resistance levels
that are calculated using a prior period’s, high, low and close

standard floor pivots formula

R4 R3+(R2-R1)
R3 R1+(high-low)
R2 pivot+(high-low)
R1 2* Pivot-low
TC (Pivot-BC)+pivot
PIVO (High+low+close)/3
T
BC (High+low)/2
S1 2* pivot-high
S2 Pivot-(high-low)
S3 S1-(high-low)
S4 S3-(S1-S2)

The money zone, price-based indicators reveal true market-generated

information. Traders that use price-based indicators are using the earliest price
information available. Traditional  indicators are lagging indicators, which
means as soon as they confirm a move, most price-based traders have already
identified a reversal and are already profiting  in their trades, leaving the
indicator- based bunch to scrounge for” seconds.” The truth is the best leading
indicators are always price based, like floor pivots and the money zone.

It has a 63% chance of being reached at central pivot point in some point
during the day

When the market gaps beyond the first layer of support or resistance, you may
be on the verge of a nice, trading session toward the third or fourth layer of the
pivots. The first thing to do is look to the pivot that was surpassed via the gap
and watch for a teat at this level on a pull-back. If the market reverses form the
gap and successfully tests R1 from above, there’s a 63.9 percent chance that it
will test R2 and a 34.4 percent chance that it will test R3. 

On days when the central pivot is not reached at all during the session, you
typically see the instance of touches at the first layer of the indicator drop
significantly to 33.9 percent from 73.3 percent. This means that the market has
gapped beyond R1 or S1 and is powering toward the next layers of pivots. Over
70 percent of the touches at the third and fourth layer of the pivots occur on
trending days , which is a day the offers the most explosive moves in the
market

Pivot purists believe the the “true” pivots are only revealed when you plug in
the high, low and close of the prior days full trading activity, including pre- and
post market trading . Therefore, you may be plugging in the high that occurred
overnight, the low that occurred during pre- market trading , and the close that
occurred at session’s end. Moreover , the close should be the settlement price if
you are trading futures, like E-mini contracts or energy futures. This is
important because the settlement price is the official closing price that the
market “settles” at after the marker has actually closed and the orders have
been sorted out, thus making it the official closing price. The process of
reaching a settlement price can take anywhere from five to ten minutes after the
actual close of the session. Typically, the settlement price is automatically
reflected  in your chart via your data provider, so this is not much of an issue. 

Pivot trend analysis 

Just one concept you take away from this book, this is ——

 Buy at support in an uptrend and sell at resistance in downtrend,

 “ In all fairness , I should add the the projected high and low prices are
best to use along this manner; if you expect tomorrow t be an up day,
then run the formula for the high . That’s the one most apt to be correct.
Be the same token, the low forecast will most likely be correct only if
the commodity declines from the next day”——— Larry Williams 

John person took the concept a step further In 2007 with his book candlestick
and pivot point trading triggers by including his method for auto-filtering the
pivots based on the current trend of the market. 
In essence, person filters all pivots except S1,R2 and the central pivot point
when the market is an uptrend . In a downtrend, all pivot are filtered
except R1, S2 and the central pivot point

Basically, filtering the pivots in this manner forces you to become disciplined
to the trend , which increases you chances for a profitable outcome. filtered
pivots decipher the trend for you, allowing you to focus on playing the pivots
that are more prone to reversals within the corresponding trend. If you remove
all the pivots below s1 support , you are forced to remain disciplined  to a
bullish trend by looking for long opportunities as s1 and the central pivot range
likewise, removing all pivots above R1 forces you to prospect in the direction
of a bearish trend

This  seems like a simple concept, but many traders can lose focus of the trend
through all the noise that comes along with trading. This is especially the case
for intraday traders, the fact is, when the marker is moving within and
established trend, certain pivots become “retired” for the particular trend. It is
at point that you focus should shift to the pivots that are active for key trading
opportunities . For example, in a bullish trend, any pivot level below s1 support
is usually just taking up real estate on your chart, since these levels are not
tested during a true bullish advance. Likewise, Any level above R1 resistance is
just noise during a bearish trend, as these levels are rarely tested during a true
decline. Therefor, if the market is trending higher, you will look to buy at
support at either S1 or the central pivot range with your target set to a new high
at either R1 or R2 likewise, if the marker is trending lower, you will look to sell
at resistance at either R1 or centra pivot range with your target set to new low
at either S1 Or S2. 
This pattern of trending behaviour will usually last as long as piece remains
above S1 support while in an uptrend, or below R1 resistance while in a
downtrend 

BOSS IN ACTION

Pivots offer one of the best and easiest ways  to profit from well-defined
trending markets. However, the market doesn’t always provide clearly
established trends. In fact, it is estimated that the market only trends an average
fo 30 percent of the time, which means you must remain focused  
And demonstrate the proper discipline to wait for prime trending opportunities.

One of my favourite trending setups occurs when the market finally breaks a
dominate trend and begins to move in the opposite direction. It takes a lots of 
conviction to break a trend and push prices in the other direction, which means
if you are able to identity the change in trend early enough, you can profit from
a very enthusiastic price move, which can last a day, or even weeks. 

If price is to continue to push higher , a perfect “buy the dip” opportunities will
likely be seen at S1 support or the central pivot range, which you can then ride
throughout the day, or as long as the trend lasts. The key is to be ready to buy
upon any pull-back to S1 or the Pivot range, as these are the zones that will
incite responsive buyers to enter the market. 

Trending markets have an interesting dynamic with the pivots. As you have
already seen, the market will remain strictly above S1 in a bullish trend and
below R1 in a bearish trend.  This will lasts as long as the market adheres to
this paradigm . However, once a severe breach occurs through the first layer of
the pivots, you typically see a shift of the trend toward the opposite extreme.
That is, a bullish trend becomes a bearish rend, and a bearish trend becomes a
bullish trend. 

This type of analysis is extremely powerful for all type of traders, including
intraday , swing and position traders. It allows you to focus your attention on
two key buying or selling zones, S1 and the central pivot range In an uptrend,
and R1 and central pivot range in a downtrend. By limiting your focus to these
levels, you are eliminating the nose and expanding your attention to detail to
the trend at hand. As a day trader, you know that when price reaches either the
central pivot or S1 while in an uptrend, you will be looking for sighs to buy.
Conversely, you will be looking for sighs to sell at R1 or the central pivot range
when the market is trending downward. This cannot be overstated, as most
traders, even seasoned pivot traders, have not yet made this fascinating
correlation. Instead, most traders will hesitate at S1 because they con’t decide
whether the market is going to break though this level or bounce off it. Buy at
support; sell at resistance. 

THE BREAKAWAY PLAY

Money zone allows you to spot a potential trend day  easily, the Floor pivots
make entering the trade far easier. First of all, when the market has formed a
low-range day in the prior session, the pivots are likely to be tight, or narrow. 
Narrow pivots foster breakout and trending sessions. Therefore , you have
advanced notice that a potential trending day may be seen in the upcoming
session if the pivot are abnormally narrow. Furthermore , if the market opens
the session with a gap that is beyond the prior day’s price range and beyond the
first layer of the indicator, the chances of reaching pivots beyond the second
layer of the indicator increase dramatically.

Boss in action

When trading the breakaway play using the floor pivots, I typically like to see
the gap occur beyond the prior day’s range and value, preferably just beyond
the first layer of the indicator. In addition, the gap should occur no farther than
the second layer of the pivots. That is , like my chances for a trend day scenario
if the gap occurs beyond R1 for a bullish play, or S1 for bearish play. If price
gaps to the second layer, I will considerate play as long as price is not too far
past this zone. If these criteria are satisfied , I will allow the first candle of the
day to play out , as price tests any of the pivots that were surpassed via the gap.
If  a successful test overs, I will enter the trade in the direction of the gap
looking to capture as much of the move as possible. 
 You will notice that this particular day had a very narrow central pivot range ,
which might as well be a dinner bell since experienced pivot players come
running out of the woodwork to trade this magnificent day. 

Central pivot range