Pivot points are a widely used tool among intraday traders because they help pinpoint key price levels throughout the trading day. Calculated using the previous day’s high, low, and closing prices. First, calculate the main pivot point by taking the average of the prior day’s high, low, and close. This yields the central pivot level, which serves as a baseline for the day’s price action.

From this central pivot, you can resistance zones. Typically, traders calculate support levels and two resistance levels. The first support level is determined by subtracting the previous day’s high from twice the pivot point. R1 is derived by subtracting the previous day’s low from twice the pivot point. S2 and R2 use expanded equations that incorporate the prior day’s trading range, but most trading platforms calculate these without manual input.

With your pivot zones defined, use them to shape your strategy. If the price opens above the main pivot suggests buyer dominance, and traders may look for buying opportunities near the first or second resistance levels. A gap below the central level signals downward pressure, and traders might initiate short trades at S1 or S2.

Always keep in mind that pivot points are most effective alongside other indicators like volume, moving averages, and candlestick patterns. A strong signal emerges when a reversal candle formation appears and تریدینگ پروفسور weakening momentum, it could be a strong signal to take profits. A bullish reversal at S1 marked by strong buying volume, it might be a high-probability entry point for bullish positions.

Pivot points are not foolproof, and prices can ignore levels during news-driven moves. That’s why it’s essential use protective stops and adhere to strict position sizing. Many traders set their stop losses just beyond the next pivot level to avoid large drawdowns if the market moves against them.

High-probability setups occur during the first two hours of the trading session, as this is when the most significant price movements occur and pivot levels are most effective as barriers. Tracking reactions near key pivots during this window can provide high probability trade setups.

Tailor your pivot approach based on your chosen market. Stocks, forex pairs, and futures may respond uniquely to identical levels due to varying liquidity and volatility. Backtesting your strategy on historical data and trading in a simulated environment can help you refine your approach before risking real capital.

By consistently applying pivot points with discipline and pairing them with strict money rules, intraday traders can improve their ability to anticipate market reversals and trend continuations throughout the trading day.