Read Larry Connors' blog – Short Term Trading Strategies
Editor's Note: Old Salty
Learns to Trade The Woodie Pivot
The following is an article written by TradingMarkets member Paul
Kirchhoffer (pk in TradersWire). I hope you enjoy and profit from it.
Brice
PS The photo
on the home page is of me, just FYI.
All the preparations had been
made and the flight plan had been filed.
At first light, Old Salty set out from his home in the
Everglades on his annual
pilgrimage to Key West.
With a bit of luck and a
following wind he’d make Grassy Key by sundown
and there he’d meet up with his
good friend Woody.
"Hey Woody," he said, "It’s good to see you. What’s with all those coins? Woody grinned and said, "It’s been too long, mi amigo. Come inside, rest your tired feathers and I’ll tell you about the magic pivot." Woody produced two glasses and a bottle of Captain Morgan rum. He poured and said, "Kid, do you remember that time I went to Chicago and meet with those floor traders? Well they told me on gap days they had to throw out their regular floor traders' pivots ‘cause they were useless. So we all sat down with this good fellow named Jack Daniels and we came up with this new pivot formula. Here’s how it works: We take yesterday's high, plus yesterday's low and twice today’s open and divide by four. Heck, those floor traders liked it so much they called it the Woodie Pivot. Before I even knew what was happening, I had a website and some friends made me an eSignal template. That template has been downloaded 9,367 times you can bet your bottom dollar there are thousands of little woodpeckers out there following that pivot every day. Poor Salty was still thinking about all those gold coins. He stretched his wings and shook his head to clear the rum. Woody he said, obviously you’ve done very well with this thing but how can I use it to make money?
"Oh, that’s easy part, amigo. Look, there’s this guy named pk who hangs out at TradersWire and he uses it every day. He posts the Woodie pivot at the open and then looks for a reversal the first time price approaches it. Here’s what he said in real time on 2/28/95:"
pk1014 (Feb 28, 2005 9:31:17 AM)
ym woodie pivot 10806
…
pk1014 (Feb 28, 2005 9:56:18 AM)
long ym 10806
…
pk1014 (Feb 28, 2005 9:58:29 AM)
out some ym +10
"Now have a look at his chart."
Old Salty stared in amazement till finally he exclaimed "Wow, Woody, that thing really is magic! Does it always work like that?" Woody shook his head and said, "Come on kid, you already know that nothing works all the time. But that guy pk swears it’s a high percentage trade the first time price approaches the pivot and he uses it looking for a quick 10 points every chance he gets." Salty raised his glass in a salute and said, "Nobody’s better than you, Woody."
Next morning, they each grabbed a sack of coins and headed straight to their favorite Key West watering hole. Upon arriving at the Margaritaville Café, they immediately recognized the voice of another old friend, Jimmy Buffett. Drinks flowed, fish stories were exchanged and together they sang:
“I took off for a
weekend last month
Just to try and recall the whole year
All of the faces and all of the places
Wonderin' where they all disappeared
I didn't ponder the question too long
I was hungry and went out for a bite
Ran into a chum with a bottle of rum
And we wound up drinkin all night
It's these changes in
latitudes, changes in attitudes
Nothing remains quite the same
With all of our running and all of our cunning
If we couldn't laugh we would all go insane “
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