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Pivot Point Trading

Glenda Conner 0

In this article, we will be discussing the Pivot Point Trading which is a very exciting topic for prop trader traders. This kind of trading has been around for a long time and was originally used by floor traders. Pivot point is very useful for floor traders prop trader  that time, since with this, they can predict where the market was heading during the course of the day with only a few simple calculations.
Professional traders and market makers use pivot points to identify potential support and resistance levels. To put it in simpler terms, the pivot point is the level at which the market direction changes for the day. These points can be critical support resistance levels. All you the information that you need for starters is that every day the market has an open, high, low, and close for the day.
Pivot points have some similarities with the Fibonacci levels. The only difference is that with Fibonacci, one must have a firm understanding and decisiveness on choosing swing highs and swing lows. However, in pivot points, one can use the same calculation. The pivot points are often used by short-term traders. These are traders who are looking for even the slightest movements in the price market and use them to their advantages.
There are traders called the Range-bound traders and the Breakout traders. The range-bound traders are traders who use the pivot points to identify the possible reversal points. And whenever they are sure that the market’s price will change in a certain point, then they can place their buying or selling orders depending on the outcome of the trend.
The breakout traders are traders that use the pivot points to identify the levels which need to be broken for a move to be classified as a real deal breakout. When you see chart which consists of acronyms, do not be confused. These acronyms are place there to help identify which the support and resistance levels are. And also, it will point out the pivot points.
The support, resistance, and pivot points are expressed by the following acronyms:
PP – this stands for the Pivot Point
S – this stands for the support level
R – this stands for the resistance level
It is very important to keep this information in mind. This will be used as an important factor when calculating the pivot points. You wouldn’t want to be left out, do you?

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