Pivot points trading strategy uses pivot points and support/resistance levels calculated from previous trading day's high, low and close to trade. Pivot point system provides 7 price levels: central pivot point, 3 support levels and 3 resistance levels. Traders look for trading opportunities at these key levels.
Pivot calculation: PP = (High + Low + Close) / 3
Support/resistance: Calculate S1-S3 and R1-R3 based on pivot point
Intraday trading: Mainly used for intraday trading
Key level trading: Look for opportunities at pivot points and support/resistance
Multiple types: Standard pivot, Fibonacci pivot, Camarilla pivot, etc.
Pivot points trading mainly applies to intraday trading, widely used in forex markets. The strategy is particularly suitable for high liquidity trading sessions. 15-minute, 30-minute and 1-hour charts are commonly used timeframes. Suitable for day traders and scalpers.
Provides objective support/resistance levels; simple calculation, easy to use; widely watched by market participants; suitable for intraday trading; can be automatically calculated.
Mainly applicable to intraday trading; may be broken in trending markets; different pivot types may give different results; needs combination with other tools; may generate false signals.
When using pivot points trading strategy, note: choose appropriate pivot type; set stops at key levels; don't rely too heavily on single pivot level; combine with price action for confirmation; note important news may invalidate pivots; use cautiously in trending markets; regularly recalculate pivot points.
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