What is a Pivot Point Indicator?
A Pivot Point Indicator is a basic technical analysis tool in the stock market, which is used by traders and investors so that they can predict the market direction and important levels for the next day. It is easy to understand.
Importance of Pivot Points
Pivot point works as a guideline for you. If you want to know at what level you should buy or sell shares, then pivot point can be a great solution for this. It is based on the trading data of the previous day, which uses high, low and closing prices.
How does Pivot Point work?
Main Pivot Point (PP): This is the level that reflects the current situation of the market. If the market price is above the main pivot point, it means that the market may be bullish. On the other hand, if the price is below it, then the market may fall (bearish).
Support Levels (S1, S2, S3): These levels can prevent the market price from going down. When the price reaches these levels, it is likely to go back up.
Resistance Levels (R1, R2, R3): These levels can prevent the market price from going up. When the price reaches these levels, it is likely to go back down.
How to Use Pivot Point Indicator?
Trading Strategy: If you do intraday trading, then pivot points should be a part of your trading strategy. You can add it to your chart and see in which direction the price is going.
Entry and Exit Points: Pivot points help you decide when to buy or sell a stock. If the price is close to the support level, you can buy, and if it is near the resistance level, you can consider selling.
Risk Management: By using pivot points, you can minimize your losses. If the price goes below the pivot points, you can exit your position to minimize your losses.
Conclusion
The Pivot Point Indicator can be the key to your success in the stock market, especially if you use it correctly. It not only gives you an indication of the market direction but also tells you when and how you should trade.
By using this indicator correctly, you can understand the fluctuations in the market and make the right decisions at the right time. So, if you want to try your hand in the stock market, then definitely include the Pivot Point Indicator in your trading toolkit.