Pivot Points Trading Strategy

📊 Pivot Points Trading Strategy 📊

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           (Reading time = 5 minutes )

➡️ Pivot Points— is a technical indicator that is used to determine the levels at which price may face support or resistance. The Pivot Points indicator consists of a pivot point (PP) level and several support (S) and resistance (R) levels.

🛑 How to Trade with Pivot Points the right way? 🛑

+ You need to learn how to trade with Pivot Points the right way. if you want to take full advantage of the power behind the pivot points.

+ Trading with pivot points is the ultimate support and resistance strategy. It will take away the subjectivity involved with manually plotting support and resistance levels.

+ Pivoting usually occurs around areas of strong resistance or support.

+ In order to calculate this, you will identify the opening price, high point, low point, and closing price from the most recent trading period.

+ Pivot points are also called the floor pivot points!

+ The pivot point’s parameters are usually taken from the previous day’s trading range. This means you’ll have to use the previous day’s range for today’s pivot points.

+ Or, last week’s range if you want to calculate weekly pivot points or, last month’s range for monthly pivot points and so on.

🟩 How to Trade with Pivot Points Day Trading? 🟩

+ The most powerful way to day trade using pivot points is the pivot point bounce strategy and breakouts of the central pivot point.

Let me explain:

Here is how to identify pivot point day trade setups using the central pivot point.

Step #1:

The market needs to start the new trading day consolidating above or below the central pivot point.

Step #2:

If the market consolidates below the central pivot point we look to buy potential upside breakouts. On the other hand, if the market consolidates above the central pivot point, we look to sell any downside breakouts.

☣️ IMPORTANT ☣️

If you day trade with pivot points make sure you go to settings and change the timeframe of the pivot points to daily. This way no matter if you’re looking at a 5-minute chart, or 1-hour chart, the pivot points you’ll see are calculated based on the daily OHLC prices.

📢'This explanation is very brief, please contact me for detailed one.'📢

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Price and Volume Relation

 ➡️ Price and Volume Relation ⬅️

 

 

 (reading time 4 minutes)

Volume is the number of shares of stock, bonds, options, or futures con tracts traded over a designated period (e.g., daily, weekly, monthly).

+ Advancing volume is the total volume for all stocks increasing in price; declining volume is the total for all stocks decreasing in price.  

+ Volume reflects the intensity (strength) of a stock, commodity or index. Volume also provides an indication of the quality of a price trend and the liquidity of a security or commodity.

📶 What volume reveals about the market's strength? 📶

1) High volume means greater reliance can be placed on the movement in price than if there was low volume, because heavy volume is the relative consensus of a large number of participants.

2) High volume indicates an active market; in an active market, the spread between bid and asked prices is usually narrower.

3) High volume is often characteristic of the initial stage in a new trend, such as a breakout in a trading range. Before a market bottom, investor nervousness leads to panic selling, a characteristic of which is high volume.

4) High volume is also attributable to a market top when strong buyer interest exists.

5) Low volume often exists during an unsettled period, such as at a market bottom. 

6) Low volume reflects a lack of confidence that is usually indicative of a consolidation period when prices are within a sideways trading range.

7) A sizable increase in volume may point to a breakout (start) or climax (culmination) of a move, which may be temporary or final. In a rare case, it may represent a shakeout.

8) Volume typically follows a trend, expanding on rallies and decreasing on reactions. Volume is useful in ascertaining how strong a change in expectations really is.

🎯The following guidelines apply to the study of volume: 🎯

+ The market is bullish if a new high occurs with heavy volume. A new high on light volume is deemed temporary.

+ A new low price with high volume is a bearish indicator. A new low on light volume is less significant.

+ A rally to a new price high on expanding volume but with less activity than the previous rally is questionable. It may point to a coming reversal in trend.

+ A rally on contracting volume is questionable. It warns of a possible price reversal.

+ If prices advance after a long decline and then go to a level at or above the previous trough, the indicator is bullish when volume on the secondary trough is less than the first.

+ If the market has been increasing for a while, an anemic price increase coupled with high volume is a bearish sign. After a decline, substantial volume with minor price changes points to accumulation, typically a bullish indicator.

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