29th Jul 2010
How to Calculate Pivot Points in the Stock, Commodity Futures and Forex Markets

Traders in the financial markets have many different methods of calculating support and resistance levels. One of these methods is known as the “floor traders pivot points”. These levels were used by floor traders on the commodity exchanges to calculate potential areas of support and resistance. Additionally, many trading systems and approaches make use of these levels.
These pivot points are easily calculated numbers that are supposed to indicate where support and resistance levels may occur. Of course you can’t just buy and sell every time the price touches these levels, but it is useful to have the same numbers that other traders are looking at. They are simple to calculate with a pen and paper, but a calculater will help you do this faster.
Although these levels are usually calculated off of a daily bar, they can also be calculated off of any other time frame, such as weekly, monthly or yearly.
The calculations are figured using the high, low and closing prices of the previous time frame. The first step is to figure out the “Pivot”, and then you can figure out the other levels.
Pivot = (High+Low+Close)/3
Resistance 1(R1) = (Pivot*2)-Low
Resistance 2(R2) = Pivot+High-Low
Support 1(S1) = (Pivot*2)-High
Support 2(S2) = Pivot+Low-High
If you need to calculate additional support and resistance levels:
First calculate R2-S1; then calculate R1-S2. The smaller of these two figures we will refer to as Ext1 and the larger one as Ext2.
Resistance 3=Pivot+Ext1
Resistance 4=Pivot+Ext2
Support 3=Pivot-Ext1
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About the Author:
Former futures broker and Trading Desk Manager. I have developed many trading systems and methods in addition to those that I have picked up from top traders over the years.
Article Source
s & p 500 support and resistanceThanks for being my loyal visitors ! The MarketClub 2 Week RISK FREE TRIAL is re-open again, no payments information required. Here's your last chance to join them now - http://bit.ly/2-week-free-trial
Traders in the financial markets have many different methods of calculating support and resistance levels. One of these methods is known as the “floor traders pivot points”. These levels were used by floor traders on the commodity exchanges to calculate potential areas of support and resistance. Additionally, many trading systems and approaches make use of these levels.
These pivot points are easily calculated numbers that are supposed to indicate where support and resistance levels may occur. Of course you can’t just buy and sell every time the price touches these levels, but it is useful to have the same numbers that other traders are looking at. They are simple to calculate with a pen and paper, but a calculater will help you do this faster.
Although these levels are usually calculated off of a daily bar, they can also be calculated off of any other time frame, such as weekly, monthly or yearly.
The calculations are figured using the high, low and closing prices of the previous time frame. The first step is to figure out the “Pivot”, and then you can figure out the other levels.
Pivot = (High+Low+Close)/3
Resistance 1(R1) = (Pivot*2)-Low
Resistance 2(R2) = Pivot+High-Low
Support 1(S1) = (Pivot*2)-High
Support 2(S2) = Pivot+Low-High
If you need to calculate additional support and resistance levels:
First calculate R2-S1; then calculate R1-S2. The smaller of these two figures we will refer to as Ext1 and the larger one as Ext2.
Resistance 3=Pivot+Ext1
Resistance 4=Pivot+Ext2
Support 3=Pivot-Ext1
-
About the Author:
Former futures broker and Trading Desk Manager. I have developed many trading systems and methods in addition to those that I have picked up from top traders over the years.
Article Source
Thanks for being my loyal visitors ! The MarketClub 2 Week RISK FREE TRIAL is re-open again, no payments information required. Here's your last chance to join them now - http://bit.ly/2-week-free-trial
Posted by JR under
Day Trading
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