Intraday Trading

Using Pivot Point in Intraday Trading

Different analysis is used by intraday traders to make trading decisions. One such calculation is the pivot point. This is a tool that allows traders to analyze the market's general trend at different times. It is the average of the closing, high, and low prices for the previous day. If the trading is above the pivot point, the pivot point indicates bullish sentiment. If the trading is below the pivot point, bearish sentiment will be indicated.

The pivot point calculation can be used to forecast support and resistance levels. These are the seven pivot levels. There are three supports and three resistances.

They are located in the middle of your chart, and are known as the primary pivot points. The pivot levels above the basic are represented by the three resistances 1, 2 and 3. The pivot levels below the base are supported 1, 2, and 3.

You can use the different levels at the pivot point to help you identify the points where the stock's price could be facing support or resistance. These levels can be used to determine the direction of price movements. These levels can only be used for intraday trading. You have a number of options to determine the pivot levels.

Day Trading using Pivot Points

How to Use Pivot Point in Intraday Trading?

Here are some ways you can do it. If the stock's price at the opening is higher than the Basic Pivot Level, it indicates a bullish bias. If the stock then surpasses R1, you can purchase it by setting your target price at R2. If the opening price falls below the PP, it is indicative of a bearish bias. These charts are only for intraday trading and will fluctuate daily based on the closing prices.

Two strategies that make use pivot points in intraday trading are the pivot point bounce and pivot level breakout. These are the pivot level breakout and bounce at pivot point bounce.

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Pivot Point Breakout

This technique allows you to enter the trade using a stop limit order. You open your position when the price reaches a pivot point. These breakouts occur most often in the morning. If the breakout is bearish, you should trade short. If the breakout is bullish, your trade should be long. Remember to use a stop loss if you're using the pivot point breakout strategy. It is also important to know where the stop loss should be set. It is wise to stick to the bottom or top that is a little before the breakout. This will protect you from any unexpected price changes. Keep the trade open until the price reaches the next level.

Pivot Point Bounce

Another type of trading strategy that makes use of pivot points is this. This strategy focuses on price swings at pivot points. You can open a trade if the price reaches a pivot point, bounces off it and touches another. If you see a stock that is testing the chart from the top and shows an upward bounce, it is advisable to purchase the stock. If the opposite happens, and the stock experiences a downturn, you should sell it. If you're aiming for short term targets, the stop loss should be set above the pivot point. It should also be below the point if your goal is long term. These trades should be held until the price reaches the next level of the chart.

Entering a trade with pivot points

After you have calculated the pivot point of the day, open a chart. Next, open the OHLC-bar chart and add the pivot points.

Watch - Now, watch the market closely and wait for the pivot point to occur. The price bars should touch new lows as the trade moves closer to the pivot point if it is a long one. If it is a short trade, be on the lookout for price bars reaching new highs as the pivot point approaches.

Allow the price to touch the pivot mark - You should then hold the stock until it touches the pivot. This basically means that the stock trades at the pivot price.

Start the Trade - The trade should be initiated when the price of the first price bar has not fallen below a new low.

What do Pivot Points indicate?

Pivot points can be useful intraday indicators if you trade in stocks, commodities, and futures. Pivot points differ from oscillators or moving averages because they are fixed and are always the same price throughout the day. These levels are fixed and traders can plan trades based on them. These levels can be used as target prices or stop loss levels. Many traders combine pivot points with other trend indicators.

Consistency Pivot points and Consistency

Intraday traders are constantly concerned about when they should exit trades. Most traders either leave too soon and regret it or stay too long to suffer losses that could have been avoided. Intraday traders need to know when to exit a trade.

This is where pivot points can be very helpful. Pivot points provide traders with much-needed clarity about three crucial steps in intraday trades: where to enter, exit and place their stop loss. Pivot points can be a great help if you have difficulty figuring your intraday trading entry and exit points.

Why pivot points are so important?

Pivot points are important for many reasons. These are the main reasons traders love pivot points.

  • These are only available for intraday trading. The pivot point formula uses the data from the previous trading day to calculate the data for today's trading day. The chart's levels are therefore only relevant for the current day. Pivot points are therefore precise indicators for intraday trades.
  • The pivot point data is only valid for one trading day. This makes it extremely specific. It is therefore only suitable for short time frames. The best time frames for pivot point indicators are 1-minute, 2-minute, and 5-minute. Day traders will find pivot points more appealing than day traders.
  • Pivot point indicators can be used to determine accuracy. Because pivot points are so common, this is why. They have an impact on the market flow and you can make use of them to help you move with it.
  • Charts based on pivot points provide rich data sources. They provide traders enough information to trade at 7 levels.
  • Pivot point indicators are a popular trading tool due to their ease-of-use. This indicator is available on most trading platforms. You don't need to calculate these levels if you have access via a trading platform. You can simply read the chart and make your trades based on it.

When to exit

Pivot points can also be useful because they allow you to quickly identify when you are losing trades.

If you're involved in a long-term trade and there is a break at a resistance level but suddenly the stock turns around and falls below it, you will know you're in trouble. The time lapse is an important indicator. Another warning sign is if you find yourself near the breakout level 30 minutes after entering the position. After you make your exit decision, don't try to reconsider. You should not wait for a trade to close if it isn't able to hold a level.

Many trading software allows traders to choose whether they want to see the pivot points for the current day or those from the previous days. Although it is easy to focus on the current levels, resistance can be created by points from previous days. Stop loss placement is another way trading points can be helpful. When identifying your stop loss points, you should be careful.


Pivot points can be calculated using a simple formula and provide traders with a lot of benefits. They might not be of any benefit to everyone. These points may be accurate to a degree but they do not guarantee that the price of the stock will stay at or reverse the levels shown on the chart. Remember that pivot points are essentially predictions. You should consider using them in conjunction with other indicators and not blindly.

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