You may download your own desktop pivot point calculator from here
How to use
First watch the video above to understand how to trade using Pivot Points. The pivot point bounce trading system uses a short term timeframe and the standard daily pivot points, and trades the price moving toward, and then bouncing off of any of the full or half way pivot points.
Pivot points are support and resistance levels that are calculated using the open, high, low, and close of the previous trading day. The pivot points include the pivot point itself and six full support and resistance points and are collectively referred to as the pivot points. When the price approaches a pivot point (especially for the first time in each direction), it will have a tendancy to reverse, and it is this reversal that is used by the pivot point bounce trading system.
The default trade uses a 5 minute OHLC (Open, High, Low, and Close) bar chart can be used from our real time chart pages, and the daily pivot points. The default trading time is any time that the market is open, but for best results the market should be active, such as during the morning or after 2 PM.
The following tutorial steps use the Nifty futures market, but exactly the same steps should be used on whichever markets you are trading with this trade.
Watch the market, and wait until the price is moving toward a pivot point. For a long trade, the price bars should be making new lows as they move towards the pivot point, and for a short trade the price bars should be making new highs as they move towards the pivot point.
Wait for the price to touch the pivot point, which happens when the price trades at the pivot point price.
Enter your trade when the high (or low) of the first price bar that fails to make a new low (or high) is broken. The following list shows the steps required for both long and short entries :
1. Price bar touches the pivot point
2. Subsequent price bar fails to make a new low
3. Subsequent price bar breaks the high of the previous price bar
1. Price bar touches the pivot point
2. Subsequent price bar fails to make a new high
3. Subsequent price bar breaks the low of the previous price bar
The entry in a short trade is when the subsequent price bar breaks the low of the entry bar say at R1, with a target of Pivot and S1, and a default stop loss of the mid-point between R1 and R2. The stop loss can be adjusted to use either the mid-point between R1 and R2, or the high (or low) of the entry bar as the stop loss, depending upon the market being traded.
Wait for the price to trade at your target or at your stop loss, and for either your target or stop loss order to get filled. The pivot point bounce trade can take anywhere from a few minutes to a couple of hours to reach your target or stop loss. Depending upon the market being traded, the target could be adjusted to be the next pivot point, and the stop loss could be adjusted to break even at a suitable time.
If your target order has been filled, then your trade has been a winning trade. If your stop loss order has been filled, then your trade has been a losing trade.
Repeat the trades as many times as necessary, until either your daily profit target is reached, or your market is no longer active.
While we suggest that you stick to the standard method of calculating pivot points, you should know that there are other ways to calculate for pivot points, like Woodie pivots or Fibonacci pivots.
More information on the pivot point bounce trading system or other pivot point strategies has been posted on our BLOG section.
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