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Home » Forex Glossary » Pivot Points

Pivot Points

Calculating pivot points involves averaging high, low, and closing equity prices to detect new resistance and support levels.  Day traders use pivot points usually in addition to other data forecasting methods to distinguish price breakpoints triggered by high volume purchases and or sales of a given stock.  The most efficient way of calculating pivot points if you don’t have expensive custom software, is to create an Excel formula based spreadsheet.  While it wouldn’t offer you streaming quotations, it beats the calculator on your Blackberry. 

While no academic evidence supporting the accuracy of this method exists, industry professionals argue that the cyclical nature of a given stock price exhibits reoccurring patterns that can be predicted and calculated solely through charting its performance.  Coincidentally, a professional blackjack player employs a very similar strategy.  Since only a finite amount of possibilities exist, one can dramatically increase the chance of drawing favorable cards simply by keeping in mind what high and low cards have already been dealt and based on that information, make an educated guess at what cards in the deck are left.  With statistics, everyone’s a winner!