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Coach's Playbook Posted by Team Topstep December 3, 2020

[VIDEO] Day Trading With Pivot Points - The Coach's Playbook

Pivot Points have been around for a while. In the old days, they were used by floor traders to determine a bias for the trading day and produce support and resistance levels, and according to legend, date back even further than that. Nowadays, they’re kind of a throwback and are available on nearly every charting service package out there.

This week, the Topstep coaches are here to give you a breakdown of the finer points of tracking Pivots Points and whether or not the information they provide is reliable and actionable.

Here’s What Our Coach’s Have To Say

Funded Trader Shout-Out!

Today’s shout-out goes to Funded Trader Dirk H, who is up more than $1,500 trading Nasdaq (NQ) futures at the time of this writing.

We’re seeing more and more traders jumping into the Nasdaq futures market lately. Whether it’s because of the tech sector’s boom or just because of the speed and velocity of the index markets’ moves, we can’t say for sure. But, with the number of shout outs we’ve been throwing to NQ traders, it’s becoming more evident by the week that its a popular product.

If you have dreams of being featured in the Funded Trader Shout-Out section of the weekly Coach’s Playbook video and blog, then sign up for this FREE webinar where Joe Rokop of Simpler Trading is going to show you how to crush the Topstep Trading Combine and earn a Funded Account®. Did I mention that it’s FREE! You can sign up for the webinar here.

What Is A Pivot Point?

A Pivot Point is a technical indicator that is used to determine market direction, as well as provide support and resistance levels. Though there are many different pivot points, they are all calculated using the same three standard variables: high, low, and closing prices.

Pivots points can be computed on any timeframe, such as hourly, daily, or weekly. Some traders will even break them down to shorter durations, like 5 or 15 minutes, for day trading purposes. Once the pivot point is determined, it becomes the starting point for a series of support and resistance levels calculated using a fourth variable, such as a Fibonacci decimal.

The five major types of pivot points are Standard Pivot Points, Woodie’s Pivot Points, Camarilla Pivot Points, Fibonacci Pivot Points, and Demark Pivot Points. As stated above, all five of these pivot point styles are calculated using the high, low, and closing prices of a specified timeframe, and the support and resistance levels are then calculated using the pivot point and another fourth variable.

How To Use Pivots

Pivot points are first and foremost used to help determine a bias, or direction, for the trading day. When a price is trading above a pivot point, it is technically considered to be in bullish territory. Inversely, when price is trading below a pivot point, it is considered to be in bearish territory. The support and resistance levels calculated using the pivot points can then be viewed as target areas if price stays above or below a pivot point.

These price levels are prevalent among retail traders, so it’s safe to assume that many traders are looking at the same areas. This is important when determining when to initiate a trade or set a stop price. For example, when you see a support level coinciding with a moving average, you can bet that there will be some buying going on when the market gets there.

Remember, a single indicator on its own usually does not provide enough confirmation to produce a high probability trade setup, so make sure to keep an eye on your other indicators for confirmation.

Trade Well!