Pivot Points: A.K.A. Floor Trader's Pivots
So, what exactly is a Pivot Point, you ask?
A Pivot Point is the calculation of a movement in price action for a single or multiple sessions.
Whether it's an intraday / daily / weekly or monthly charting scale, Pivots or Pivot Points show the balance (hence Pivot Point) of a that specific piece or cluster of price action your are currently analyzing.
The base calculation of a Pivot Point is H+L+C/3.
This is where you will take the High of a session, add it to the Low of the same session while again adding the Closing price to the High and the Low. Once you have added the H+L+C you need to divide the sum by 3.
This will give you an exact Pivot Point level for a specific piece of price action.
This calculation also works extremely well across pieces of multiple price action, such as 15 minute, 30 minute, 60 minute, Daily, Weekly and Monthly sessions of price action.
Pivot Points have been used by many floor traders for years to calculate quarter hour sessions of Pivot activity to gauge market action throughout the coarse of the trading day.
Using Pivot levels can help you gauge where to enter or exit a trade, based on your time frame.
Once you understand the formula and the concept of Pivot Point analysis you should have some great success in implementing them into your everyday trading.
Pivot Points are very powerful indicators while used standalone, but while used in conjunction with other confirming indicators such as Candlesticks, Fibonacci analysis, Moving Average studies and additional price action confirmation, Pivot Points will absolutely enhance you trading.
|
Linear Mode
