Hello,

Today, we will learn something new. So keep yourself attentive and note all the main points we will cover in this topic named 'Pivot Points'. We will solve the problems you will face when understanding this topic. So, let's get started.

Points We Will Cover:

Introduction: A get to know.
How to apply it
How does it work/ Use of it
Formula
Its compatibility with other indicators
Pros and Cons

A Brief Introduction:

When learning 'Pivot Points', we believe in understanding the topic of 'Average' first. So, what are pivot points, and how do they work? Well, understanding pivot points is a cup of tea when you know a little bit about 'average'. Yes, it works on the principle of average. Pivot Point is an average of intraday high and low and the close on the previous day.

When understanding the ongoing trend of the whole market over different time frames, 'pivot points' is good to use in that situation. This indicator allows the trader to predict the trending direction of the market with the help of 'supports and resistance'. By doing so, one can easily understand where the market is trending. New traders must not get nervous by using this indicator for the first time because it's easy to use and easily understandable. It allows the trader to get a big profit from his trade.

How to apply it:

First, move to your trading Demat account.
Open up this indicator from your indicators list.
Apply this indicator to your graph with the help of your verified data.
After placing it, wait for the 'support' and 'resistance' to do their work for you.

How does it work? / Use of it:

Let's understand all this process in points:

Firstly, note down the high, low and close from the previous day from the trading day.
Sum all the three values and divide their sum by three.
Name that outcome value so that you will not forget it. Let's name it M.
After getting our M, we should find S1, S2, R1 and R2. In easy terms, our first and second Support and Resistance.
Put these Supports and Resistances in the graph and wait for confirmation.
When the trend line passes through R1, R2 we may see a bullish trend. But if the trend line passes through S1, and S2 we may see a bearish trend.

Formulas:

M= (High+Low+Close)/3

R1= (M×2) - Low

R2= M+ (High - Low)

S1= (M×2) - High

S2= M - (High - Low)

Where:

M= Pivot Point

R1= Resistance 1

R2= Resistance 2

S1= Support 1

S2= Support 2

Note: High, Low and the close value are from the previous day of the trading day.

Compatibility with other indicators

When it comes to using this indicator as very different and beneficial you may think of using it with other indicators. Yes, you can use it with whatever Indicator you want to use.

The process of adding other indicators with 'Pivot Points' are as follows:

First, go to the indicators list you may find at just the bottom or top of the graph.
Select the indicator 'Pivot Points'
After adding 'Pivot Points', again go to the indicators list and select the other Indicator as per your desire.

Let's look at the benefits of adding another indicator with pivot points :

You can compare both Indicators and can do the accuracy comparison between them. So that you can find out the best indicator for you.
You can make your precision strong by doing so.

Pros and Cons:

Pros

Just by knowing the previous day, you can make your today better in the trading world.
It is easy to use.
Very convenient.

Cons

You should have collected the data from the previous day, otherwise, you can not place even a single trade using this indicator.
It may take a long time for you to tell the precision because the trend line should cut the support/resistance.
You can trade in a sideways trend using this indicator.

Thank You,