HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
NordFX information and reviews
NordFX
86%

Mastering Pivot Points: A Comprehensive Guide to Trading Strategies


Feng Zhou   Written by Feng Zhou

Pivot Points are indispensable tools for traders, derived from the prior day's trading range, offering insights into potential trades and serving as vital indicators in technical analysis. In this comprehensive guide, we will delve deep into the world of Pivot Points. We'll explore their significance, limitations, calculation methods, trading strategies, and provide key takeaways to empower traders in their pursuit of mastering Pivot Points.

The Significance of Pivot Points

Pivot Points are invaluable for traders for several key reasons:

However, it is essential to recognize that Pivot Points should not be used in isolation. Traders commonly combine them with other technical indicators like moving averages, oscillators, and volume analysis to obtain a more comprehensive understanding of the market and make well-informed trading decisions.

Limitations of Pivot Points

While Pivot Points are invaluable, they come with certain limitations:

It's essential to view Pivot Points as part of a comprehensive trading strategy and not rely solely on them for making trading decisions. Traders should analyze multiple indicators, market trends, and fundamental factors to gain a well-rounded understanding of the market before executing trades.

Calculating Pivot Points

The calculation of Pivot Points involves several steps:

Calculate the Pivot Point (PP): The Pivot Point is the average of the high, low, and closing prices from the previous trading day. The formula for calculating the Pivot Point is:

Pivot Point (PP) = (Previous High + Previous Low + Previous Close) / 3

Calculate Support and Resistance Levels: Support and resistance levels are calculated using specific formulas based on the Pivot Point. Here are the formulas for calculating these levels:

There are alternative methods that include the opening price in the calculations, providing additional levels of support and resistance.

Pivot Point Trading Strategies

Traders can employ various Pivot Point trading strategies to make informed decisions:

Bottom Line and Key Takeaways

Pivot Points are indispensable tools for traders, providing crucial support and resistance levels for making informed trading decisions. They assist in defining trading ranges, identifying potential reversals, and determining overall market trends. However, traders should view Pivot Points as part of a comprehensive trading strategy, combining them with other technical indicators and market analysis tools for well-rounded decision-making.

FAQ


RELATED

How to Make a Cryptocurrency Trading Plan

With each passing day, more and more traders join in on cryptocurrency trading. It’s unsurprising, considering the cryptocurrency market has been rapidly expanding for over a decade...

Top 11 Forex Trading Strategies in 2023

Trade popular currency pairs at low cost with Vantage. Vantage is a leading regulated forex broker offering access to the world’s most popular currency pairs...

The7 Strategy - Grail for Beginner Traders

Among the various trading systems available for free, only a few of them are effective in practice. For the successful application of such strategies, it is enough...

Should I invest aggressively?

Wondering what market execution style you need to follow to get the profit you want? Continue reading today's article to learn more!

Balancing a Day Job and Day Trading: An Expanded Strategy for Success

The world of day trading operates at a rapid pace, distinct in its pursuit of quick turnarounds and its reliance on minute-to-minute fluctuations. Traders buy and sell stocks, commodities...

Strategies to Trade Profitably During the Economic Crisis

Covid 19 and the global economic crisis that has evolved this year has created significant challenges for businesses and traders in every country. Additionally...

3 Strategies to Boost your Trading Mindset in 2023

Getting ready for the new trading year? Check out this article to discover some of the most effective trading strategies to boost your goals!

Why trading goals matter

Without clear goals, trading can become an impulsive, messy process that may lead to haphazard results, or at worst, large financial losses. Clearly defined trading goals...

Limit Order vs Stop Order: an Overview

A trade order is a request that a trader places on a marketplace or any online investment intermediary (like a broker) to trade on some asset. This is the basis. Without understanding its essence...

Choosing the Forex strategy that is right for you

There is a variety of Forex strategies. But how can one choose among all this diversity? The trading process when working with a manual strategy is completely under the trader's control...

Deep Dive into the SMC (Smart Money Concepts) Forex Strategy

In the vast universe of trading strategies, the SMC Forex trading strategy has emerged as a contemporary approach to price action trading. But what exactly sets it apart? Let's delve into this...

Trading Strategies for Volatile Markets

In this article we explore different types of trading strategies for volatile markets like forex...

The Intricacies of Short-Term Trading: A Comprehensive Exploration

In the intricate tapestry of financial markets, short-term trading emerges as a dynamic segment, renowned for its rapid pace and the transient opportunities it presents...

Mastering Cryptocurrency Trading: Strategies for Bitcoin, Ethereum, and More

Cryptocurrency trading has become a captivating realm for investors and traders alike, offering the potential for substantial profits, particularly when combined with tools like 100x leverage...

Top 10 Forex Strategies for Profitable Trading in 2021

The estimated trading volume of the foreign exchange (Forex) market stands at $6.6 trillion, a figure that exceeds even the volume traded across all stock markets...

How to use macd indicator in forex trading?

To make the trading process easier and more successful many brokers and traders prefer to use forex economic indicators. These are half-automatic programs and aim at depicting this or that criteria...

Top trading strategies

Are you lost in a huge amount of forex strategies? Are you looking for the perfect one? We've made a list of the best trading strategies for you! Read short summaries...

Mastering the Trading Plan: A Comprehensive Guide to Minimizing Errors and Enhancing Profits

In the high-stakes world of trading, the old adage, "Those who fail to plan, plan to fail," resonates profoundly. The dynamic world of trading requires more than just intuition...

Maximizing Day Trading Success: Optimal Times, Strategies, And Market Insights

When it comes to day trading, simplicity can be beneficial. Spending two to three hours daily is often more advantageous for most traders in stocks...

What Is Scalping Trading in Cryptocurrency?

Scalp trading in crypto is a strategy that short-term traders employ to take advantage of trading opportunities. It is not a novice, but it can be profitable. The professional scalper...

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.