A Complete Guide to Technical Trading Tactics
John L. Person · 2004 · 287 pages
Person hands you the exact pivot point formula floor traders used to set daily support and resistance, then walks a dozen real trades where it nailed the high or low within a few ticks. It never shows you the misses.
The one idea
The book's engine is the pivot point: take the prior period's high, low, and close, average them, and you get a number (P) that marks where the market is likely to balance. From P you derive four more levels, two resistance and two support, using nothing but addition and subtraction. Run the same math on a day, a week, or a month of price data and you get a grid of target levels for the next session, the next week, or the next month.
Person's argument is that these numbers are not mystical. They are the same math floor locals were doing on scratch paper before electronic trading existed, and the reason they work (when they work) is that enough traders are watching the same levels that the levels become self-fulfilling. He layers candle pattern recognition and stochastics on top as confirmation, calling the combination P3T (Person's Pivot Point Trade): a pivot level plus a candlestick reversal plus a momentum signal in the same direction.
The second half of the book is not really about pivots. It shifts to order types (14 of them), the psychology of holding a losing position, pyramiding into winners, and options basics. It reads like three shorter books stapled together: a pivot point manual, a trader's mental-game pamphlet, and an options primer.
What it actually teaches
Person's core sequence, laid out in Chapter 6, for building and trading a pivot point grid.
CALCULATE THE PIVOT
Take the prior period's high (H), low (L), and close (C) and average them: P = (H + L + C) / 3. Person uses this on daily, weekly, and monthly bars in parallel, not just one time frame.
BUILD THE FOUR LEVELS
R1 = (P x 2) - L, R2 = P + H - L, S1 = (P x 2) - H, S2 = (P - H) + L. These four levels plus the pivot itself form the day's or week's expected trading range.
STACK TIME FRAMES
Run the same calculation on daily, weekly, and monthly data for the same market. When the weekly and monthly S1 or R1 numbers land close together, Person treats that convergence as a stronger signal, not just a coincidence.
WAIT FOR THE P3T CONFIRMATION
Do not trade the level alone. Wait for price to actually reach S1, S2, R1, or R2, then look for a candlestick reversal pattern (harami, dark cloud cover, engulfing, doji) and a stochastics divergence in the same direction before entering. That three-part stack, pivot level plus candle plus stochastics, is what he calls a P3T signal.
TAKE THE FIRST TEST ONLY, SET A STOP-CLOSE-ONLY
Person's rule is to trade the first touch of a level, not the third or fourth, because by then the pattern is already known to other traders and tends to fail. He favors stop-close-only orders over regular stops on these trades, accepting that a stop-close-only order can produce a bigger loss than expected if the market gaps or trades limit against the position.
What it looks like Monday morning
A reader who takes this seriously builds a spreadsheet (or turns on the pivot indicator already built into their charting platform) that computes daily, weekly, and monthly pivot levels for whatever they trade, and checks each morning whether the weekly and monthly numbers cluster near each other. That clustering is the only part of the method that takes real prep time; the levels themselves are a five-second calculation once the prior period's H/L/C are in front of you.
The harder habit to adopt is the discipline Person actually demonstrates in his worked examples: he does not buy or sell at a pivot level by itself. He waits for a candle pattern and a stochastics signal to line up with the level before entering, and he only takes the first touch of that level. A Monday-morning reader who skips that confirmation step and just buys every S1 or sells every R1 is doing a different, much weaker trade than the one described in this book.
| Market | Time frame | Prior H / L / C | Target level | Actual result |
|---|---|---|---|---|
| Sugar (Mar 2002 contract) | Monthly (Sept data for Oct) | 7.80 / 6.40 / 6.63 | S1 = 6.09 | Low was 6.11, two ticks off |
| Live cattle | Monthly (Feb data) | 76.52 / 73.62 / 74.20 | R1 = 75.94 | High was 76.05 |
| Cotton (Jul 2002 contract) | Monthly (Apr data for May) | 40.71 / 34.30 / 34.71 | R1 = 39.02 | High was 39.65, 63 points off |
All three are presented as hits; the book does not include a comparable example where the target level failed.
Pivot points can give you the edge as fast as you calculate the data.John L. Person, A Complete Guide to Technical Trading Tactics
Where it fails
- Every worked example is a winner. The sugar, cattle, silver, dollar index, crude oil, cotton, and S&P examples in Chapter 6 and 7 all show the pivot level holding almost exactly, off by a handful of ticks or points. There is no example in the reviewed edition of a pivot level that got blown through, which is the standard survivorship problem: a hindsight-selected sample of hits tells you nothing about the method's real hit rate.
- No backtest, no win rate, no sample size. The whole case for pivot points rests on roughly a dozen anecdotal chart examples from 2001-2002. There is no statement anywhere in the book of how often S1 or R1 actually holds across a larger sample, and no discussion of what a losing streak with this method looks like.
- The edge described has been arbitraged away since 2004. Person frames pivot points as somewhat insider knowledge from floor traders that off-floor retail traders were only starting to learn. Every retail charting platform now plots daily, weekly, and monthly pivot levels automatically and for free, and high-frequency systems watch the same levels in microseconds. Whatever edge came from being one of the few traders who bothered to calculate these numbers by hand is gone.
- The method needs a discretionary trader running three other tools at once. A real P3T signal requires simultaneously reading a candlestick pattern, a stochastics divergence, and a multi-time-frame pivot grid, then judging whether it's the first test of the level or the third. That is a lot of subjective judgment stacked into one signal, and the book gives no objective rule for resolving disagreement between the three inputs.
- Reads as three books, not one. Roughly half the page count (Chapters 10 through 14) is order types, trading psychology, pyramiding, and an options primer that has little to do with pivot point analysis. A reader buying this specifically for the pivot method is paying for a lot of general market-education filler around it.
Who it is for
Buy it if
You trade futures or index products intraday to weekly, already read candlestick charts, and want the actual floor-trader pivot point formula spelled out with real worked numbers instead of a vague description. Chapter 6 and 7 alone are worth the read for that formula and the multi-time-frame framing.
Skip it if
You want any statistical evidence that pivot points produce a real edge, or you already have a pivot indicator on your charting platform and just need the formula, which is one paragraph, not 287 pages. Equity-only investors and anyone looking for a systematic, backtested approach should skip this.
As an Amazon Associate I earn from qualifying purchases. It costs you nothing extra, and it does not change what gets recommended or what the verdict says.