Using Dynamic Pivot Trading System To Make Profitable Trades

Day trading community has many techniques to guide the user on where to enter a trade (buy or sell) and when to close (square-off) the trade. None of the known techniques gives consistent net profit at the end of the year across all trading platforms. Moreover, the techniques that work on a trending market are different from the techniques that work when the market moves in sideways. Identifying whether market is entering in trending or sideways is also not easy. In this paper we shall pick moving average indicator and how dynamic pivot system used in a specific way improves performance of moving average indicator. There is a reason behind why we picked moving average indicator for this paper. Moving average indicator is one of the best known and simple method many traders use. It is known that, this indicator works well during trending market and gives lots of false signals when the market is in sideways. Many indicators use moving average principle; for example, MACD and Moving average cross over indicator. It can be shown that dynamic pivot system improves performance of all these families of indicators. The system introduced in this paper is verified with three years of data in Indian and US markets.