Re: Pivot Point Trading
What are Pivot Points?
Pivot points refer to technical indicators that day traders use to identify potential support and resistance levels in the stock market. Based on the previous day's high, low, and closing prices. Traders use pivot points and the support and resistance levels they provide to determine potential entry, exit, and stop loss prices for a trade.
Day Trading with Pivot Points
When calculating pivot points, points act as key support or resistance levels. High volumes of trading often occur when the price is at or near the pivot point. The main trading strategies used in Pivot Points are
Pivot point bounces
If the price action hesitates and bounces back before reaching the pivot level, you should enter the trade in the direction of the bounce. If you are testing the trade with price above the pivot line, and the price moves close to the pivot line and bounces back to the upside, you should enter a long (buy) trade.On the other hand, if you are testing a pivot line from the lower side and the price bounces back to the downside after hitting the pivot, you should sell short. The stop-loss for the trade is located above the pivot line if the trade is short, and below the pivot line if the trade is long.
Pivot point breakout
If the price action crosses the pivot line (e.g. from bottom to top), the trade should continue in the direction of the breakout. If the breakout is bearish, the trade should be short, but if the breakout is bullish, the trade should be long. A good place to implement a stop loss order is on the other side of the pivot line. For example, if you buy long when price crosses the pivot line, your sell stop will be placed slightly below the pivot line.
What are Pivot Points?
Pivot points refer to technical indicators that day traders use to identify potential support and resistance levels in the stock market. Based on the previous day's high, low, and closing prices. Traders use pivot points and the support and resistance levels they provide to determine potential entry, exit, and stop loss prices for a trade.
Day Trading with Pivot Points
When calculating pivot points, points act as key support or resistance levels. High volumes of trading often occur when the price is at or near the pivot point. The main trading strategies used in Pivot Points are
Pivot point bounces
If the price action hesitates and bounces back before reaching the pivot level, you should enter the trade in the direction of the bounce. If you are testing the trade with price above the pivot line, and the price moves close to the pivot line and bounces back to the upside, you should enter a long (buy) trade.On the other hand, if you are testing a pivot line from the lower side and the price bounces back to the downside after hitting the pivot, you should sell short. The stop-loss for the trade is located above the pivot line if the trade is short, and below the pivot line if the trade is long.
Pivot point breakout
If the price action crosses the pivot line (e.g. from bottom to top), the trade should continue in the direction of the breakout. If the breakout is bearish, the trade should be short, but if the breakout is bullish, the trade should be long. A good place to implement a stop loss order is on the other side of the pivot line. For example, if you buy long when price crosses the pivot line, your sell stop will be placed slightly below the pivot line.
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