Yes, Pivot Points are good for day trading. There are two main reasons:

  • They help you to identify take profit targets if you have a running profitable trade.
  • They show you if market is overbought or oversold. That information can be helpful to open a new trade.

Still, the biggest mistake is to treat Pivot Points as a solo indicator. If you open a short position only because price went to R2 resistance then you’re using it wrong.

Here are 5 tips that can help you to start trading Pivot Points the right way.

1. Start using 4-hour Pivot Points

Daily Pivot Points is your base when we talk about day trading. Still, there are many days when volatility is lower and price fails to reach even R1 or S1 daily Pivot Points levels.

With 4-hour Pivot Points you have new sets of Pivot + R lines + S lines every 4 hours. It’s worth to keep eye on them because on many times they might be bore helpful than daily Pivot Points.

4 hour pivot points

2 Combine information from few different Pivot Points

I’ve mentioned 4-hour Pivot Points, but we also have daily Pivot Points, weekly Pivot Points, monthly Pivot Points. Of course with pivots based on longer time frames price will react less often wit R and S levels. For example, with monthly Pivot Points it can be only for few days during a month. Still, it’s good to know that there is some another level which price may react with.

3. Use entry signal

Pivot Points give you possible levels of support and resistance. It’s your job to build a strategy around that information. It’s a bad idea to trade only based on Pivot Points itself. Combine them with:

  • price action
  • clear entry, stop, take profit levels
  • divergence
  • trend lines

and you should see better results.

Divergence example:

divergence and pivots example

4. Check other Pivot Points variants such as Fibonacci Pivot Points

The basic Pivot Points are constructed based on formula from decades ago. There are interesting modern variants. In most cases the middle line – Pivot Point – is in the same place. The difference is with S1, S2, S3, R1, R2, R3 location.

Popular variants are Fibonacci Pivot Points or Woodies Pivot Points. I recommend to check Fibonacci Pivot Points where S and R levels seems to work better than with classic Pivot Points.

fibonacci pivot points comparision

5. Price action is still important

Pivot Points is an indicator based on price. You have possible support and resistance levels. Still, the bigger picture based on the price is crucial part of trading. You look at things such as:

  • suply, demand zones
  • candle patterns (doji, hammers, inside bars), especiall form higher time frames
  • trend lines from higher time frames
  • price patterns such as head and shoulders, double top etc.

and based on that information you are using Pivot Points.

In summary

I hope that you have better understanding what Pivot Points are and what they are not. They can be a great help in your day trading but they are not some magic formula that works by itself.

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