Stockmarket Pivot Points

Online Stock Trading - What are Pivot Points?

Stockmarkets, are designed to allow and even oblige stock trading. A market that doesn't move up or down is of no use to anyone. Market makers therefore move prices up and down to generate trade. If the price falls below the 'support' level they will move the price further down to the next support level. If the price moves up above the resistance level they will move it up to the next resistance level.

Pivot points are used to calculate these various support and resistance levels, .

If you are interested in online stock trading then pivot points are useful and are calculated using the followng formula to show where the support and resistance levels will be for the next day.

Pivot point = P = (H + L + C)/3

First area of resistance = R1 = 2P - L
First area of support = S1 = 2P - H
Second area of resistance = R2 = (P -S1) + R1
Second area of support = S2 = P - (R2 - S1)

Where :
P = pivot point
R = resistance
S = support
H = High of the previous day
L = Low of previous day

If you don't fancy doing the calculation yourself you can use the automatic pivot point calculator in the left hand column of this page.

Related post : Stocks and shares - stocks and shares for beginners

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