Pivot Points Day Trading Strategy That Actually Works!

Do you remember a time where you missed out on taking profits on a position by literally a few minutes or even seconds? Sound familiar? Yeah. Hey, what's up YouTube? This is Foxtail Digital coming to you again with Black Girl Stocks. I know a lot of people who are day trading have a hard time with taking profits. And if you're like me, then you've definitely used the famous percent method where you know you'll say you'll take profits at a certain percentage like 10%, 20%, 30%, or even 50%, whatever percentage to maximize on your profits and then also at the same time protect yourself from losing too much in the market. In this video, we're going to break down the basics of how you can start day trading and taking profits using what's known as the pivot point trading strategy. This video is going to be for the person who needs help with taking profits and day trading and also looking into strategizing in their trades better. If you're a fan of support and resistance, then I promise you are going to love this. The pivot point day trading strategy. It's actually something that one of my supporters put me on to while we were having a one-on-one discussion. It's honestly amazing to me how you guys can learn things from the channel, but I also learn things from you. So, let's go ahead and let's get into it. What are pivot points? Basically, when you think of a pivot point, it's a tool that a lot of traders use to figure out key support and resistance levels. And pivot points aren't just something that you can use for stocks, but you can use it for any asset that uses charts to visually display changes in their price. You know, this could be for forex, crypto, options, anything. So, by using pivot points, then you can get a good feel for when to enter or exit a trade. Let's break this down. When you see the pivot point system, you're basically going to see seven lines on your graph that highlight support and resistance levels. So, in the middle, you're you're going to see the pivot point line. The pivot point line is your central line. Everything revolves around this because it represents the average of the key price points from from the previous day. The high, the low, and the close. Next, you're going to see your support levels, S1, S2, and S3. And these are going to be your support levels. You might start to see a slowdown or a complete stop and a potential bounce around these levels and then see the price start to move back up. Then you have your resistance levels, R1, R2, and R3. And these are going to be your resistance levels. So, this is where the price might start to see pressure if you're in a bullish position. and have problems moving above or past these points. And so with these support and resistance levels, we can use price action, volume, and other indicators and methods to gauge when to jump in or out of a trade or even when we should step to the side and not trade at all. This is how to calculate pivot points. And I know that this is going to sound like a lot of math, but bear with me. This isn't going to be the focus for today. We're really not going to get too much into, you know, these calculations, but I'm going to have a screenshot of all of these. You have your pivot point calculation, which is yesterday's high, low, plus the close divided by three. So, you're doing all of that. You have your calculation for your support levels. So, S1, S2, S3. See how you calculate that? Boom. Ah, then you have your resistance levels. R1, R2, R3. here the calculations for those. Okay, but yeah, like I said, I'm really not going to go too much into that. I really just wanted to give you just I wanted you to at least see what it looks like. But most trading platforms have pivot points built right in. You don't have to crunch any numbers yourself. All you have to do is just add the pivot point indicator to your trading charts in just a few clicks, okay? And that's going to make it very simple and easy to see where those pivot points fall every day. Now, keep in mind, it's going to be changing every day and it's going to be different for each stock. So, this is completely tailored to the stock that you're looking at and tailored for that particular day based on yesterday's price. This is going to be the importance of pivot points. We're talking about day trading, right? What what does it mean when a stock opens above or below the pivot point? Because we did say that that's one of the most important lines in the pivot point setup. If it opens above, then that's a bullish signal. So, it's like the market is telling you, hey, things may start to go up. Now, on the other hand, if you see the price open below the pivot point, then that's bearish. So, it could be time to brace or adjust because the market could start to drop lower. I want you to keep in mind that the center pivot point is going to be the most important support and resistance level based on yesterday's price movement. This is going to act like a major barrier zone against price fluctuations. And that's not to say that the the resistance levels and the support levels aren't important, but just keep in mind this is going to be your highlight. You really want to see how the price moves around that pivot point. I feel like the next thing you're going to ask is, okay, well, what are the best time frames to trade with pivot points? All right. Now, keep in mind, we're day trading here, so we're going to want to use shorter time frames. The best time frame for pivot points are going to be the one minute chart, five minute and 15 minute charts, things like that. These are going to be the most beneficial because these time frames are going to allow you to see those small price movements and also react to changes in the market quickly. Now, getting into the actual strategy and this is going to be setting up your stop-loss levels, your entries, and also your take-profit levels based on these pivot points. Before we get into the ins and outs of timing your trades, the first thing I want to say is you really want to understand a few factors that you would want to align that would give you the green signal for your trades. These are going to be our day trading entry signals using pivot points and the MACD indicator. I'm going to keep this strategy very simple. For our trades, we're only going to be using the candlestick charts, the volume, just the volume bars on your chart, the pivot point lines, and the MACD indicator. That's it. You can use other things, but oh, and then moving averages. Okay, but we'll keep we'll keep it simple. The first thing you want to do is determine what the overall trend is. Okay, so remember we said we're day trading. We're going to be using those shorter time frames, but still you want to use a higher time frame to determine what the trend is. look at a time frame like the 15 minute, 30 minute, or even a 1 hour chart. And so you want to know the direction of that trend. And that's going to make sure that your trades are going to be aligned with the overall market direction. Essentially, you'll just have more opportunities for larger profits. The next thing is to wait for the market to open and then see how the price starts to move around that pivot point. And what you're going to want to do is you're going to want to look for the market to either break above or below that pivot point after the market opens. The next thing is to look for a MACD crossover of the the MACD and the signal line. Okay? So, of course, for bullish, you're going to have the MACD crossing above the signal. And for bearish, you're going to have the the signal crossing above the MACD. And this is just showing you that the momentum is moving to the bullish or the bearish side. The next thing you want to do is always confirm with volume. Now, you can use a volume indicator if you would prefer, but for me, I just stick with the traditional volume bars. And so, what you want to see around this around these levels, you want to see an increase in volume. The that's going to show strength behind that price movement. Now, as far as the entry point for bullish positions, once the price is above that pivot point, then there's a bullish MACD crossover and the volume is increasing, then enter the trade. On the opposite, for bearish conditions, you want to wait for the price to move below that pivot point. Wait for a bearish MACD crossover with the MACD crossing below the signal and also see that the volume is increasing, but this is going to be red bearish volume. And then you would enter your bearish trade. And this is going to be an example of what we're talking about. First, we see the stock open close to the pivot point. And then it has a quick move upwards towards that first resistance level, that R1 level. And then if you look downward, you can see that the MACD histogram has an upward slope. Our MACD line is above the signal line. And we had decent volume, but not really, honestly. It looked a little inconsistent. So that showed bullish momentum. we could kind of see signs of a reversal by that inverted hammer candlestick that we see near that R1 and that usually suggests a potential reversal especially with that high volume. Before I say anything else, I also want to give a plug to the candlestick review cards. Okay, so this is one of the first cards in the deck. Definitely good flash cards to review so that you're able to recognize these quickly. Okay, so make sure you scroll down below and get your candlestick review cards right now. Okay, so how could we have known that we would potentially have that reversal is we could also look down there. We can see that MACD histogram, the histogram bars starting to slope downward. Our MACD line crossed below the signal line and that shows some bearish momentum as well. And then we also saw that volume increase on the red bearish volume bars. So that also showed rising selling pressure around that area. And so seeing these signs, we can get into a bearish or a short position at that pivot point. Setting our stop-loss slightly above the R1 level for risk management. And as far as the profit targets, we can look for S1 for first target level. Keep an eye on the bearish volume for confirmation. And then you can look towards more profit targets at S2 and S3 just depending on how that trend continues. We could take profits at that S1. Once we see the MACD crossover, we didn't see much movement. It pretty much side traded for a while. Very low volume. And we could potentially take another position later in the day once we saw that MACD crossover with the increase in volume. But I'm not sure how you feel about holding trades overnight. That may be one where you know it was a quick trade, hold it for a few minutes, jump in, jump out or just stand to the side for that side for that. Okay, so the next setup is going to be a bullish trade. And so basically what we see at market open is a strong bullish candlestick that breaks above R1. So we were already above the pivot line at market open. Okay. And so we can see that momentum with the MACD indicator because the MACD line is above the signal line and that confirms that bullish momentum. And then also looking at that histogram, the bars are sloping upward and it's also above that center zero line. So this early breakout signals potential bullish opportunities because that price is moving towards the higher resistance levels. Now, as far as the profit targets, so the price moved up to R1 where we saw a small pullback. And so, while we see some profit taking at R1, which is a valid approach, we still see that bullish momentum. And so, that could encourage you to hold that position towards R2. And so, once we reach that R2 level, you can kind of see some indecision with these dogee candlesticks starting form around that level. But even with that, we can still see some key bullish signals. That MACD line is still above the signal and the MACD and signal lines are both above that center zero level, but we do see lower volume around that area until we reach the final target R3. So that's a third potential profit level. But we see some signs of a rever of a potential reversal starting to show. So we see that MACD crossover. the MACD line crosses below the signal line showing that the bullish momentum is starting to get weaker. And we also see the MACD histogram starting to slope downward. So this shows for a potential bearish reversal and a caution for bullish traders or for entering any more bullish trades or just taking profits here. Now, as far as the reversal signals after we reach that initial R3, we saw that pull back down to R2 after a bounce near that R3 and we saw that bearish volume start to increase and a little bit of bearish momentum. But we saw another MACD bullish crossover signaling a potential rebound. But you can see with less volume and how close the MACD lines are, there wasn't much movement past that. Now I want to look at a trade that shows bullish and bearish trading in the same day. So a shift in trend. Now the first thing that you're going to see is the market opens slightly below the pivot line. And so this hints at potential downward bearish momentum as we move forward. So we see that bearish signal with the MACD line crossing below the signal right below the pivot point pushing for that bearish bearish movement and then also both of those lines crossing below that center zero line and that solidifies the bearish trend. A clear entry for bearish positions. Now, as far as where you can take profit, now you can set your stop-loss slightly above that pivot point. And as far as where to take profits, you could look to take profits around the S1 support level. Then, as that downtrend continues with that strong volume, you see how the volume is increasing with bearish bars. That validates that strength of that bearish trend. And so, you could also take profits at S2 with that strong bearish momentum even looking at it. But actually, it didn't make it to S2. And we can kind of see that momentum starting to wear off with that upward sloping histogram, but it never fully broke above that center zero line until later on in the day. So, you can kind of see it stayed around that S1 level. The momentum was a little weak there, weak volume. Then once we start to see that volume pick up and we also see a bullish crossover with the MACD above the center line and the MACD line above the signal, we start to see that bullish movement upwards towards the pivot line again. So that would be a good entry signal at that MACD crossover as well as seeing that increase in volume and the MACD crossing above the signal. Set your support slightly below where that price was consolidating because a move below that would be a break in that trend. Set your profit target at that pivot point. So that could be another quick trade for the day. So we traded both bearish and bullish in the same day. Making sure to monitor. For me, the change in the trend really happens when those MACD lines cross above or below that center line in between where you would see the histograms turning from green to red. Lastly, I just wanted to talk about a side trading day. This is where I would usually want to stay out of the market. Basically, you see the day start off with strong bullish momentum from that S1 support level to the main pivot line during the first hour of the day. You know, that could be a good short-term bullish trade with that bullish momentum and the increase in bullish volume. But once you start to see it transition sideways, it starts to get tight around that pivot point. So you see smaller candlesticks and this is on a 5-minute chart. And we also see lower trading volume. So this signals indecision in the market. We also see weaker MACD signals because those lines are a lot closer together and that shows slow momentum. Seeing that tight price action, low volume and weak MACD signals highlights a sideways market. I would usually avoid that or trade a neutral style trade like credit spreads, iron condors, and things like that. All right, and that's going to be it for this deep dive into the pivot point day trading strategy. And so with this, we talked about how you can start to get into the market with a new perspective. And that's whether or not you're a seasoned trader or you're just starting out using the pivot points into your trading plan. Successful trading isn't just about our strategies or the tools that we're using, but it's really about continuing to learn, stay adapting, and always apply the different methods that you've learned that work best for you at that time. If you found this video helpful, please make sure you click that thumbs up button for me. It really helps the channel. Also, subscribe and click that notification bell so that you get notified anytime I upload a new video for you guys. And if you have any questions, make sure you leave a comment below. I'll catch you on the next one. [Music]