Pivots, The emotion Behind the trade


Iv always wondered why and how do pivots work so well? Ofcourse even if I do find the answer It will be of no help. A tennis player doesnt look to find the reason why the ball spins in mid air when he slices it at at a 45Degree angle. ITs just a muslce memory to him and he knows very well its result on the court.
Similar for us, traders, we buy/sell according to what backtests and real trades have shown, its effect on the market.

What is support?
IF we can very loosely and broadly classify all players in the market into 3. The buyers the short sellers and the players sitting on the sidelines.
Now lets suppose the price rises from 400 to 410. Buyers are happy, but really sad why he bought only 100 shares, if he had 300 he would have made much more.
The short seller is making a loss, 10rs loss would wipeout his month's earnings, he is sweating, trying to find a way to exit his position.
Player sitting on the sidelines is frustrated he missed such a great move, when half of his 50 indicators said buy (lol).

Now price reacts and falls from 410 to 405…403…402…400….Now all three participants are ready
to buy. Buyer accumulates, Short seller cover his shorts (buying) and Mr sitting on sidelines finally
enters his long order, it is this point of convergence that creates support and prices advance.

The flip side is that this "support" breaks, now we have alot of selling as all three participants are interested in selling, hence a panic break in prices, this encourges other people to enter their sell orders as well.

However the question of how pivots work is still unanswered, the key to the participants getting emotional with position happens with TIME. A buyer wont think "if I had bought more" every 5pts jump in prices, that thought (in most cases) only precipitates after prices have advanced well beyond his
entry and stayed there for a reasonably long time.

Similarly, before a PL is considered a pivot we wait for one bar, this bar shoudnt go near the lows. This is the anxiety period for market participants. After our pivot Low has formed we can say that support has been created.

When Pivot Low breaks, market participants are already emotional about their positions and will sell on the break, they dont have charts, but they remember the entry price, once that breaks, he wants to save his position and exit….