Pivotal Points are a key factor in the Livermore's Trading System. Livermore was the first person to use the term Pivotal Point and incorporate it as an important part of his trading system.
He never wanted to buy at the lowest price or sell at the top. He wanted to buy at the right time and sell at the right time.
The Pivotal Point Trading theory allowed Livermore the chance to buy at the right time--the beginning of a new trend". But this required him to have much patience. Patience of waiting for the perfect trading situation to finish its development (Accumulation or Distribution).
If all the right conditions did not coincide on a particular stock which he was following, he would not buy or short it, because the it is nor the right to enter into the market.
Patience . . . patience . . . patience — wait for the perfect trade — that was the key to his timing success.
Though buying on the Pivotal Point assured him the best chance of coming into the situation just as the action was about to start, bear in mind, when using Pivotal Points to anticipate movements, that if the stock does not perform as it should after crossing the Pivotal Point, this is a very important danger signal that must be heeded immediately.
Every time Livermore lost patience and failed to wait for the Pivotal Points, every time he fiddled around for easy profits, he lost money.
Livermore said that once he understood Pivotal Points, they became one of the true trading keys, a reliable trading technique. They are timing devices that can be used to get in and out of the market with great success.
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