Online Trading Academy - October 2019



October 2019

PIVOTING PROFITS HOW THEY CAN HELP YOU IN TRADING T rading was an exclusive and elusive club before the time of easily accessible markets and charts. To actively have traded stock, you had to have an exchange membership or know Since these platforms are showing you the historical pivot points, they’re relatively useless when determining the

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someone that did. To keep up with the latest trends of your stock, you typically had to order a book with the prices of those stocks from the previous week or month and chart everything out by hand. To make the most of the information available, traders would develop an estimate for support and resistance for the next day or week.

future pivot points. While these are used primarily for determining the value of tomorrow’s stock price, you can enter the weekly high, low, and close to determine future support

and resistance levels for position and swing trading.

While not as powerful as actual supply-and-demand zones, the pivot points

This is a technique that institutional traders utilized to make the most of the information available in years past; but, they still utilize it when trading electronically today. When institutional traders use these values to make their own trading decisions, they will typically carry enough power to change stock prices. These pivot points tend to work best on the indexes and commodities since they generally are used in the futures pits.

“When institutional traders use these values to make their own trading decisions, they will typically carry enough power to change stock prices.”

developed by floor traders can offer an insight as to the direction stock prices will move in. To determine your pivot point, take the previous day’s high, add the previous day’s low plus the previous day’s close, then take that sum and divide it by three.

Since this technique has risen in popularity, it canwork on individual stocks and support what you’re findingwith your supply-and-demand zones.

While these pivot points aren’t a replacement to the core strategy by any means, they can assist traders in making informed decisions as to where to buy and sell their securities. Regardless of the tool you use, make sure they are a part of a written trading plan that allows you to analyze the markets and consistently make decisions objectively. The consistency and objectivity you instill in your trading are crucial to being successful in any market. Our core strategy is a great way to maintain this. To learn more or if you have any questions, visit us anytime at or call us at 425-307-6610.

This pivot point can act as a support or resistance level for the stock price and is also applicable to Forex and futures charts. Since the futures and Forex markets trade 24 hours a day, there is no official daily close. To calculate your pivot point in these situations, the closing value is considered to be the trade price at 5 p.m. Eastern Standard Time.

–Bill Geist

Most online trading platforms will automatically point out pivot points on the graphs of your stock.

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