Do Pivot Points Really Work?
Updated: Feb 6, 2019
There is a lot of confusion regarding pivot points, some people find they work very well others do not. Quite simply, many people understand pivot points incorrectly.
Many traders think pivot points are trading signals. For example price broke through R1 is a buy signal or broke S1 is a sell signal. Other traders think pivot points show price direction – for example price broke through R1 so it is moving upwards etc.
The reality of the situation is pivot points are used to indicate the distance and speed that a price is moving. It is similar to candlesticks on a chart.
If you were to close your chart on MT4 and just monitor price, you would see figures moving but you would not have a sense of price action, the speed of price change or the distance that price had moved, by opening a chart all this would be clear.
Pivot points provides a point of reference in exactly the same way that opening a chart does vs simply looking at price, it provides a better feel for price action.
Looking at pivot points this way and not the ‘popular’ way, should help drastically when it comes to scalping.