Approaching a Contrarian Buy as a Pivot Point Trade
Long live Jesse Livermore!
In his colourful life, Jesse pioneered the science of pivot points. He went bust many times while trying to understand pivot points, but ever since the fundamentals have been delineated by him, pivot points have stood the test of time.
After falling to a pivot point, where there is heavy volume, a stock then doesn’t look back for a while. Entry into a stock is considered ideal at or around a pivot point. Due to the surge-potential at pivot points, one’s trade gets into the money very fast here.
I don’t think pivot points can be predicted off-hand. Potential pivot points make themselves visible at newer lows. Their trademark is the accompanying very high volume.
So, what does one do here?
One punches in a trigger-buy above the pivot-bar or pivot-candle.
If the point pans out as a pivot, and the characteristic surge follows, one’s entry is triggered as the price pierces the pivot-bar high. Good entry.
Now manage the trade, and exit properly.
How does one exit properly?
I’ve spoken about this many times, and will do so again, not today, but very soon.