What is Pivot Point in Trading and How to use Pivot Point calculator

Before we discuss the pivot point, we have to understand What is mean by support and resistance levels. Support means the price at which stock is likely to stop falling and find support. In other words, there are more buyers than sellers at a support level and hence there will be more demand than supply .

Resistance level is the price at which stock is likely to stop rising further and face resistance. In other words, at the resistance level, there will be more sellers than buyers. There will be more supply than demand at the resistance level.

Pivot points are levels on chart which acts as Support and Resistance levels. The horizontal line in image below (support and resistance) on the chart are called pivot points. The pivot point levels can be calculated from the previous period data and it can be usually plotted on charts as horizontal lines. There is a center line called pivot line(PP) which acts as equilibrium point. Stock is usually bullish above pivot point and bearish below pivot point. Then we have pivot Resistance levels ,namely , R1, R2 , R3 etc . and support levels namely S1, S2 , S3 etc . Pivot points levels change with the timeframe that you select . In this post, you can know what is pivot point , what is pivot point calculator and how to use it.

What is Pivot Point?

What is Pivot Point
What is Pivot Point

A pivot point is a technical analysis indicator used by intraday traders to recognize the support and resistance levels in the stock market. The support and resistance levels depending on the previous day’s high, low, and closing price. Traders use these pivot points to know the possible entry, Exit, and stop-loss prices for trades.

Basically, pivot points were revealed by floor traders who worked in the equity and commodities markets. While starting the trading they have used previous days high, low, and close prices to determine the pivot for the present-day trading. 

The support and resistance levels are calculated using the previous day’s high and low prices and the pivot point difference. If pivot trading is above the pivot point is considered as bullish and the pivottrading below the pivot points are considered as bearish.

How to use the pivot point in trading

Pivot points can be determined for multiple timeframes using the software which can help you to customize the indicator. Some software may help you to determine the pivot points for a weekly and monthly period but the regular indicator can be plotted on the daily level. 

Pivot points are mostly used indicators in intraday trading. The tool presents a specific plot of support and resistance levels to find intraday movement in the market.

Example 1

Below is a picture of how they look on a 15 minutes time frame called daily pivot point trading. All support and resistance levels are within view.

pivot point chart
pivot point chart

While traders usually find their support and resistance levels by last day movement in the 

market, pivot points will automatically plot on the daily basis plot.

Example 2

Below is a picture of how they look on a 1-day timeframe called the monthly pivot point. All support and resistance levels are within view.

pivot point chart
pivot point chart

How to use Pivot Point Calculator

A pivot point calculator is used to  determine significant daily, weekly, and monthly support and resistance levels with the help of pivot points. Standard pivot calculators are mostly used by traders to calculate pivot points.

If you are new to our screener and want to learn how to use pivot points calculators, then we are with you to explain. 

Here are the few steps to know how to use pivot point calculator

Step -1 Visit Pivot Points Calculator on Intradayscreener website

Step- 2: Select the stock symbol for which you want to you want to calculate pivot points

pivot points calculator
pivot points calculator

You can select stocks from the dropdown automatically and the pivot point will calculate based on yesterday’s High, Low, Close Value. You can also enter custom values and calculate the nifty pivot point.

Types of Pivot Point

There are four types of pivot points

  • Traditional or Standard Pivot point
  • Woodie Pivot point
  • Camarilla Pivot point
  • Fibonacci Pivot point

Traditional / Standard Pivot point Calculator

Traditional Pivot Points are also referred as Floor Pivots or Classical Pivot Points. Its the most commonly used and most widely used pivot point .  Apart from the other pivot points traditional pivot points are most commonly used by the traders. Lets see how do we calculate standard pivot points

Pivot Point (PP) = Previous day (High price + Low Price + Closing Price)/ 3

Support and resistance can be calculated using the pivot points

First Level Support and Resistance

Support (S1) = (Pivot Point * 2) – High
Resistance (R1) = (Pivot Point * 2) – Low

Second Level Support and Resistance

Support (S2) = Pivot Point – ( High – Low )
Resistance (R2) = Pivot Point + ( High – Low)

Third Level Support and Resistance

Support (S3) = Low – 2 ( High – Pivot Point)
Resistance (R3) = High + 2( Pivot Point – Low )

Uses of Traditional Pivot Points

  • It is used to identify market movement(Bullish move or Bearish move)
  • It can be used to recognize the trading range
  • It can be used in any time frame
  • It can be used and decide when to enter the market to place orders or to exit from the market to take profits
  • It is used to reduce risk
  • It can be used to find the next day trading ranges

Woodie Pivot point Calculator

How to calculate Woodie pivot point

Pivot point (PP) = (High Price + Low Price + 2 Closing Price) / 4

First Level Support and Resistance

Support(S1) = (2*Pivot point) – High Price 
Resistance(R1) = (2*Pivot Point) – Low Price

Second Level Support and Resistance

Support(S2) = Pivot point – High Price  + Low Low Price
Resistance (R2) = pivot point + High Price – Low Price

As you may have seen, the Woodies Pivot point calculation is different from the traditional pivot points formula. The main difference is that Woodie’s formula places more importance on the closing price. 

Camarilla Pivot Point Calculator

Camarilla Pivot Points were developed by Nick Scott in the year 1980. It is the same as woodie’s formula; they use the previous day’s close price and central pivot range to calculate the levels.

How to calculate the camarilla pivot point

Pivot Point = ( High Price + Low Price + Closing Price)/3

First Level Support and Resistance

Support(S1) = Close Price – ((High Price – Low Price) x 1.0833
Resistance(R1) = Close Price + ((High Price – Low Price) x 1.0833

Second Level Support and Resistance

Support(S2) = Close Price – ((High Price – Low Price) x 1.1666)
Resistance(R2) = Close Price + ((High Price – Low Price) x 1.1666)

Third Level Support and Resistance

Support(S3) = Close Price – ((High Price – Low Price) x 1.2500)
Resistance(R3) = Close Price + ((High Price – Low Price) x 1.2500)

Fourth Level Support and Resistance

Support(S4) = Close Price – ((High Price – Low Price) x 1.5000)
Resistance(R4) = Close Price + ((High Price – Low Price) x 1.5000)

Fibonacci Pivot Point Calculator

How to Calculate Fibonacci Pivot point 

First Level Support and Resistance

Support(S1) = Pivot Point – (0.382 x (High Price – Low Price))
Resistance(R1) = Pivot Point + (0.382 x (High Price – Low Price))

Second Level Support and Resistance

Support(S2) = Pivot Point – (0.618 x (High Price – Low Price))
Resistance(R2) = Pivot Point + (0.618 x (High Price – Low Price))

Third Level Support and Resistance

Support(S3) = Pivot Point – (1.000x (High Price – Low Price))
Resistance(R3) = Pivot Point + (1.000 x (High Price – Low Price))

we can start calculating the pivotpoint using the standard pivot point formula. Then multiply the previous days’ range with the  Fibonacci ratio. Lastly, you have to add the result to the pivot point to determine the resistance levels, and you have to subtract the result from the pivotpoint to calculate the Support levels.

Why Day Traders use Pivot Points

Day traders usually use pivot points indicators for various reasons. 

High efficiency

The pivot point is recognized as the most reliable indicator in the market. It is used by many intraday traders to find the trade entry and exit points. It allows traders to follow the market and also uses the prior day’s trading action to guess the current day’s action.

 Easy to use

A pivot point indicator is an easy tool used by traders and it is consolidated in many trading platforms. Those platforms can automatically determine the support and resistance levels, so the trader no need to do it manually. After acquiring the pivot levels, the trader can focus on the market trend for the day.

FAQs

What is the weekly pivot?

Swing traders mostly use pivot points based on weekly data, while position traders choose the monthly data. They are obtained from the daily pivot points formula but use the last week’s high, low, and close values.

How do pivot points work?

Traders use pivot points in equity and commodity exchanges. They’re calculated according to the previous day high, low, and closing prices. Pivot points are also used to find the resistance and support levels.

What does pivot meaning in stocks?

A pivot point is a technical analysis indicator, used to calculate the market trend over various time frames. If the stock price is above the pivot point, then it indicates bullish movement, and if the stock price is below the pivot point, it indicates a bearish trend.

How do I use pivot points in intraday trading?

To start a pivot point breakout trade, you have to begin a position using a stop-limit order when the stock price breakout the pivot point level. These breakouts will frequently happen in the morning trading session. If the breakout is bullish, you must take a long position, and if the breakout is bearish, you can take a short position. 

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