Finnews24. com – In the Forex or stock market as well as in the fields of financial investment, the Pivot point is an extremely important milestone for traders' reference. Although effective, the way to locate the pivot point is quite complicated and not easy for new traders. In the following article, Finnews24 will help you learn what a pivot point is and the most accurate pivot point trading method.
What is a Pivot Point?
What is a Pivot Point? Highly accurate performance indicator indicator
Surely you have wondered what a Pivot Point is? trên các báo cáo phân tích kỹ thuật, điểm xoay pivot là một chỉ báo trong kỹ thuật , được ứng dụng để làm điểm ghi nhận mốc xu hướng thị trường sẽ xảy ra đảo chiều trong từng thời điểm riêng biệt. Pivot Point chỉ là trị giá bình quân của mức cao, thấp trong ngày và giá đóng cửa của thị trường ngày hôm trước. Vào ngày hôm sau, nếu giá nằm trên điểm trục, về phương diện lý thuyết điều này đã chứng tỏ tâm thế lên giá đang xảy ra và ngược lại. Như thế là có thể thấy , điểm xoay pivot được tính toán để định vị các điểm nóng có khả năng biến đổi xu hướng thị trường từ tăng sang giảm và ngược lại.
Structure of the Pivot . pivot point
Pivot Point has a structure made up of 7 lines including:
- The main line is known as the pivot point or pivot point,
- The 3 lines above the pivot point are marked as s1, s2 and s3 (3 support lines) ,
- The 3 lines below pp, are the 3 resistance lines, marked as r1, r2 and r3.
Formula for calculating Pivot Point
In fact, locating pivot points is a very simple job. Because investors only need to take all the technical parameters such as high, low and closing prices of the previous trading session. Next, the trader will use the Fibonacci numbers to calculate the score.
Pivot point = [high price (previous period) + low price (previous period) + closing price (previous period) ] / 3
Since counting the pivot points, we are able to locate support and resistance levels according to the following formula:
- Support s1 = 2 × pivot – high price ;
- Support level s2 = pivot – ( resistance level r1 – support level s1 );
- Support s3 = pivot – ( retracement r2 – support s2 );
- Resistance level r1 = 2 × pivot – low price ;
- Resistance level r2 = ( pivot – support level s1 ) + resistance level r1 ;
- Resistance level r3 =pivot – (resistance level r2 – support level s2 ).
If we look closely at the above formula, we will see that both r1, r2, r3 and s1, s2, s3 take the value of the p point or the main pivot point used to calculate.
Therefore, the pivot point will become the most important point, like a judge determining the value of the levels r and s.
Furthermore, based on the previous day's high, low and close for estimation, between levels r1, to r2 or r2 to r3 or s1 to s2 will be called a range or price range.
The wider this price range, the larger the difference between the levels in the next trading day. As above, the smaller the trading range, the narrower the distance between levels will be on the next day.
Relationship between Pivot Point and S and R lines
The pivot point will be in the middle of the connection point through which the R and S levels compare. Above are the S or support zones and below will become the resistance or R zones.
Traders will often look at the relationship in terms of balance pairs such as r1 with s1 ; r2 with s2 ; and r3 with s3.
How to use Pivot Points in Simple Trading
In the forex market , thanks to the pivot point, traders are more likely to quickly locate support and resistance price zones, thereby providing an opportunity to take profits.
For futures or stock types, the Pivot point always shows its benefits. Many currency pairs also tend to move around the pivot point area . Besides finding the answer tođiểm pivot là gì , trader cũng nên biết rõ cách dùng của loại dụng cụ báo chỉ số này trong mua bán các giá trị trên thị trường Forex.
How to trade with Pivot Points when the market reverses to the upside?
When the Market Turns Up – How to Trade Pivot Points?
After learning about pivot point is g ì we learn how to trade on the Pivot Point. When the price chart on the market is in an uptrend, the pivot point will be used as a support or resistance boundary.
- Place a buy order when the price initially rises at the support levels s1 and s1. At the same time, shareholders need to stop buying when the support is below s2 and s3.
- Place a buy order when the price initially rises at the retracement levels r1 and r2. Along with that, a sell stop order needs to be issued at the support level above r2 and r3.
Trade on a Breakout (breakout)
Not only the trading area for reversal, but also the pivot point should be used when the cost has a breakout condition. In this situation, the trader should proceed with the trade in the following direction:
- Place a buy order when the price breaks out of the resistance level r1.
- When the price returns to the resistance level of r1, change the trend by adding more supporting tools.
For a situation where the price bar breaks through support or resistance, the pivot point becomes the anchor point to prevent waves of volatility.
How is the Pivot Point different from the Fibonacci sequence?
Because the same is presented by support or resistance levels or are collectively known as resistance levels, however, it can be seen that the pivot point is only made up of 3 levels: high price, low price and closing price to structure the structure. .
Meanwhile, fibonacci are equal to the hard ratios of the fibonacci sequence itself, such as 0. 382, 0.5 , 0. 618….
Therefore, each different form of calculation will often produce different results and will have separate trading methods and strategies .
Notes when trading with Pivot points
Up until now, the pivot point is still widely considered to be extremely high in terms of index predictability. Compared with many other indicators, the pivot point is most likely to limit the price lag to the greatest extent. However, in the process of conducting transactions, traders should pay attention to a few issues as follows:
- The structure of the pivot point includes: the main pivot point ( pp ) , 3 upper resistance levels ( r1, r2, r3 ) and 3 lower support levels ( s1, s2, s3 ).
- Contrary to ema, trendline, resistance and help lines, pivot point levels are always the same at all time frames. Thanks to that, people only need to use only 1 formula to calculate. Of note, these pivot points are valid for the same day only. to the next day , the levels r1, r2, r3 and s1, s2 s2 with the same score pp are always modified.
