The ONLY Pivot Point Trading Guide You'll EVER Need

Pivot points are one of the most overlooked yet powerful tools in trading. And once you understand how to use them correctly, they can be a gamecher. That's why in this video, we're going to break down pivot points in a simple way and show you a beginnerfriendly strategy that will improve your trades. Pivot points serve as a valuable indicator for determining a market's trend. They work the same way as support and resistance levels, but they're pre-calculated by your trading platform. So unlike other indicators, pivot points do not change throughout the day. They remain fixed based on the previous day's data. This fixed nature is precisely why traders use pivot points. They provide predefined support and resistance levels that can help simplify decision-making. When a new trading day begins, a pivot point is automatically created. Price tends to gravitate towards these like a magnet. When it reaches the pivot point, typically it will do one of three things. Consolidate or move sideways until a breakout occurs, bounce off the level and reverse direction, or sometimes it will pass right through the level without any real reaction. That's why it's important to never just rely on one tool. Everything works best when you combine it with other signals or indications. We're going to go over our strategy on how to trade this in just a second, but there's something you need to understand first. To take advantage of these, you want to know how they're created. These are determined really simply by taking the previous day's high, its low, and its closing price. Now, based on this calculation, a main pivot line will be drawn for the next trading day. You can view this line very simply. If price moves above it, that can indicate a bullish trend and you may look to long. If price moves below this line, that may indicate a bearish trend emerging and you may look for short opportunities instead. Additionally, there are multiple support and resistance levels calculated above and below the main pivot point. So, in order to use this indicator, simply go to your indicators tab and search for pivot points standard. In here, we're going to open up the settings. We won't be using these additional levels since we really only want to focus on the pivot points. So, in order to keep our charts clean, we're going to disable all these levels, only keep pivot points for now. I'm going to keep this on traditional mode because I found that that one is the most consistent for this strategy, but I definitely encourage experimenting. What works for one person might not work for everyone. So, mess around with these. See if you can find something that works better. Let me know in the comments. As for the pivot time frame, you can just leave it on auto. This way, the pivots will just adjust automatically and you won't have to mess with it if you change time frame. If you're using the 15-minute, then you're going to see a new pivot point created each trading day. But let's say we're using the hour, then only one pivot point will be created at the start of each week. Let's go over how we can use this in a trading strategy. Here's a downtrending market. This is identified because it's trading below the pivot point. After this move, a new trading day began along with a new pivot point for that current day. At the start, price was consolidating and then began moving towards the previous pivot point. Now remember, pivot points from the day prior or even older can still be in play and they almost always provide some interaction as support or resistance. So after price traded to these levels, it actually reacted and began moving down lower, confirming resistance. This dropped the market below the current day's pivot point. This move created a new lower low suggesting that it may look to go down lower. You'll see that we have an old horizontal resistance level near this pivot point. This makes it a higher quality trade setup. For this, we could be patient and wait for a retest of the pivot point looking for it to act as resistance and we can look to enter a short trade. Let's look at this again from an uptrending perspective. Here the market is trading above its pivot point. This is indicating to us that it is in an uptrend. So as time passes, price starts consolidating above the pivot point once again. Here we see price sweep the range low. And importantly, this is paired with an energetic bullish candlestick. Looking for further confluence, we can take out our fib tool and see that this has retraced back to the 0.5 level. It then created a fair value gap and broke structure. Now, this is our confirmation to look for that long trade. If you're not familiar with fair value gap, fib retracement, or any of the topics in this video, check out our full free trading playlist. We cover all these topics and more. And if you found this video helpful, I ask that you share it with another trader that will get value out of it, too. Subscribe if you'd like to see more, and make sure to hit that like button. Thanks for watching. [Music] [Music] go. Go.