Why pivots don't work as well..

as say trend lines, support and resistance. And as I learn more from James I understand why and it's completely logical. It's not a Jedi mind trick as I have previously thought it was.

This is because pivot works as a mathematical average. It's an mathematical estimation and it's 'dead'.

However if we draw the trend lines and support and resistance correctly, this represent actual psychological barriers which is more accurate.

Why is this more accurate? because (our first assumption of Technical Analysis, is that) price is a direct representation of what the market is thinking, feeling. And by drawing trend lines, support and resistant line, we accurately represent the current sentiment of the market. That's why price always go back to where it's been before.

On the other hand, pivots are mathematical averages which try to estimate such barriers.

And since trend lines are more accurate, why use any less?

Your computer will also thank you more for using less computation power, lines to draw on your screen that ocassionally looks like multi-coloured spaghetti. I know mine does, my laptop is getting 'old' and 'slow'. hahah

That's why James hardly uses any indicators (except for stochastic)... or for that matter, any trader who is a 'price action' guy.

I suppose some people find price action hard to learn because there's no fix formulas.. or perhaps they feel that it is 'dangerous'? Perhaps some find drawing TL from 'significant' points could be as subjective as 'beauty'which lies in the eye of the beholder? But really, significant is just that- significant, obvious, kinda hard to miss. (Just take a bit of practice), and everything you think is significant probably is.

I just find learning more about price action really good and fun actually. It may be difficult at first but the more I learn it, the more I can discern what to do and how to take a position - stand, long or short. And the more I learn, the 'easier' it becomes to 'survey' the landscape.

On the other hand, I figured that relying solely on indicators is a bad thing. Don't get me wrong, I just think using some indicator is good but depending on them heavily is a bad thing for the simply reason that indicators are mathematical formulas trying to quantify human behaviour.

It would work sometime but since human behaviour is as erratic as it can be, it can also be wrong a lot of times. Take for an example, an engineer usually have a pen and pocket calculator in his pocket. So whenever we have these 'signals' we say - that's an engineer.

You can easily see why it'll generate a lot of false signal- an accountant, a model, a mom, a child and just about anyone can have a pen and pocket calculator at one time or the other in their pocket.

Laslty, someone did a program to test it out. Check it out here. As you can see, if you don't know what you're doing with indicators, it can tell you anything you want it to say.