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If you have ever day traded the futures or commodity markets, there is a good chance you have at least heard of pivot points. Floor traders created pivot points many years ago as a quick means of determining support and resistance levels during the frenzied pace of pit trading. As electronic trading has taken over, online day traders have adopted these pivot points and the fact that so many traders use them is probably the main reason why they might work.

That being said, pivot points are not a foolproof way of making money day trading commodities, futures or stocks. Traders must understand how the markets react around the pivot points in order to formulate a successful trading strategy and that is where a book like Secrets of a Pivot Boss by Franklin Ochoa can be crucial to your success. There are common ways to trade pivots that can have mixed levels of success depending on the trader. Ochoa discusses his pivot trading strategies developed from many years of research and trading experience.

Pivot points are calculated from the open, high, low and closing prices of the previous day of trading. After calculating the numbers, you are left with four initial resistance levels and four initial support levels plus a main pivot point. The formulas can readily be found on numerous websites and most trading platforms offer them in their package of trading indicators.

The common pivot trading strategy is to sell at the resistance points or wait for a break above them and buy on a retracement back to a pivot point.

This basic strategy can be summed up on one page, but Ochoa uses about 300 pages to cover his methods for trading pivots. You will learn practically all you want to know about trading pivots by reading this book. Of course, once you understand the strategies, trading live with real money on the line is where the real learning is done.

One of the most beneficial things traders will get out of this book is being able to determine which days you should use the pivots to trade the ranges of the markets and when to use the pivots for breakout trades. The author describes how there are days that setup to be trending days and days that are setup to trade in a range. In each case, you should have your game plan set before the markets opens with a particular strategy to use. The markets, of course, will not play out as you expect every day, but the odds should be put more in your favor.

Secrets of a Pivot Boss also has some chapters devoted to Camarilla pivots, which I found very interesting. Camarilla pivots is another form of pivots that have a different calculation than the floor pivots and it is basically a trading system in itself. Ochoa also discusses the use of longer-term pivots, pivot trend analysis and taking trades when multiple pivots line up in the same area.

Overall, Secrets of a Pivot Boss is one of the better books I’ve read on day trading. Ochoa does an excellent job of explaining his trading methodologies using pivot points and other parameters that help make the strategies more successful. Traders can come away with an overall trading system using the methods described in this book, but each trader should choose the methodologies that fit his or her trading style.

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