Are Pivot Points Still Used To Track The Market Today?

Using pivot points as a trading strategy has been around for a number of years because of the ease of finding where the market is heading during that day. With the development of several other methods and techniques to predict where the market is going, it is almost hard to believe that pivot points are still around. Not only are they still around, but pivot points to this day are still one of the most popular trading strategies out there.

Pivot points are the level where the market direction changes throughout the course of the day. By using a few simple calculations using the previous days low, high and close you can come up with points. With the collection of these points, which are known as either critical support or resistance levels, you will come up with pivot points.

There are several reasons why pivot points remain so popular, but the main reason is its ease and how they are so predictive. Simply by using the previous dayÕs information you can calculate potential turning points for the day that lies ahead of you. This will in the end give you an opportunity trade.

To calculate pivot points there is a pretty extensive formula to get going. After calculating the previous days high, low and close you will find 7 points, 3 resistance levels, 3 support levels and the actual pivot point. The three pivot points that you want to pay the most attention to are the resistance level 1, support level 1 and the actual pivot point.

What you need to know is if the day opens above the pivot point then the bias for the day is long trades. If it opens below the pivot point then it is short trades. On a perfect scenario the market would open above the pivot point level and gradually get to resistance level 1. Obviously though, we all know that life is not perfect and nothing is that easy.

There are several ways you can trade pivot points, some more advanced than others. Two of the easier ways to trade pivot points are known as a breakout trade and a pullback trade. A couple of the other ways to trade include breakout of resistance and advanced trading. There are many more ways to trade pivot points, but these are four of the more common methods.

No matter how many techniques that are brought up to traders, it seems that pivot points remain towards the top of the list for methods to track what could happen. With several methods to track pivot points, it gives you a wide variety of options for how you want to calculate what's happening in the market.