How to use
Pivot Points for
Stock Market Trading
Pivot Points are technical indicators derived by calculating the average of a particular stock’s, forex pair or futures high, low and closing prices. Using pivot points as a trading strategy has been around for a long time and was originally used by floor traders. Pivot Points have become very popular with day traders because of their ability to identify support and resistance based off of the prior days price action. If price action falls below the pivot point, it may be used as a new resistance level. Conversely, if the price action rises above the pivot point, it may act as the new support level.
Currently, there are several different ways to calculate pivot points. Using some simple arithmetic and the previous days high, low and close, a series of points are plotted on a chart. These points can be used as support and resistance levels. The pivot level, support and resistance levels calculated from that are collectively known as pivot levels. You can find one of the popular sites used to help calculate pivot points by clicking here.
Some trading strategies used by traders utilizing Pivot Points are:
- Breakout Trades
- Pullback Trades
- Range Trading