hi there folks right in this week's video I want to talk to you about a very useful very powerful technical indicator that's used by Traders today in fact it's been used by Traders for many many years now at this juncture you may be asking yourself why is he dressed like an ice cream salesperson well maybe so but this is in fact one of the trading jackets that I used to wear when I was in the trading pits in the city of London back there in the wild 80s standing there in the pits shouting and screaming literally throwing around hundreds of thousands of dollars on a daily basis now in those days we didn't all have the technology that we have today we didn't have all those technical indicators the macds the sarcastics rsis and so forth but there was one technical indicator that we used and that was the pivot Points in fact us Floor Traders created them that's why they're called The Floor Trader pivot Points now I'm going to show you exactly what the Floor Trader pivot Points are and the best ways that I think you can use them to get you into trades but also sometimes to keep you out of Trades as well also used for stop place it's a great indicator let's get to it okay so let's talk about pivot Points now pivot Points are basically horizontal lines drawn on a chart that represent support and resistance now these lines are derived from a calculations basically using the last candle's data so if you're looking at the daily chart basically the data on The Daily candle high low closing and the like basically all that data is put in uh to a calculation to create these levels of support and resistance now as I said we are going to be looking at the Floor Trader pivot Points I think the Floor Trader pivot Points are the most widely used the most commonly used the most accurate I think and also actually the easiest to calculates where we develop them on the training floor all those years ago but you may come across other methods of calculation on these pivot Points so make sure that you are using um the desired one you may have heard of the camarilla pivot Points or indeed the Tom de marks Pivot Point never heard of him um or the Woody pivot Points I'm sure you heard of the Fibonacci Fibonacci pivot Points as well I've never looked at these myself but there are other ways of calculating them so first off let's look at the actual main pivot point and that calculation all the other lines basically derive from this line as well another pivot is basically the average of the high the low and the close so basically add them all up and you come up with the pivot so for example you may see the high up there at 1 25 10. the close 124.90 and the low 124.60. so you add all those up and comes from 3.746 and divide that by three um and you will see um the pivot is one spot two four eight seven so that's the main pivot point now the only other calculation that you need to be aware of is the range so this is the range okay the range is basically the difference between the high of that particular candle particularly trading period and the low uh so for example you might have here uh the high up there 25 10 the low down there 2460 same example well clearly the range of that candle um is going to be 50 Pips so you need to know the pivot and the range and then we can work out uh the calculations and once you've done those these lines will appeal the chart something like this so your resistance zones are one R2 and R3 will be above where the pivot point is and the daily support one two and three will be below and the calculation is quite simple okay and I'll show you exactly what it is now so basically support one is going to be two times the pivot minus the high support two is going to be the pivot minus the range and support three is the low minus two times the high minus the pivot so work out the high and minus the pivot multiply it by two and take that away from the low these are the support zones uh resistance exactly the same but of course inverse so R1 it will be two times the pivot minus the low this time R2 will be uh the pivot plus the range and R3 which is often very well respected if it gets up there often you see that as a level for retracement um is the high plus the pivot minus the low and and multiply that by two so there is the calculation and of course uh where there are examples uh we can give you a brief look on how that works I'm not going to go through them all um because I think it's going to be quite boring for you but you can maybe take a screenshot of this and see how the calculations are worked out so once you plug this into your trading tool a lot of the pivot Points are worked out for you um you don't need to do all that calculation so now you know what's behind them but you don't really need to be working these out anymore as we used to do on the trading floor with a good old-fashioned calculator in fact before that we used to use an abacus no we didn't anyway there you go those are the Floor Trader pivot Points okay so what are the uses of these all very well having these lines and their levels of resistance and support so here are the uses there are a number of uses uh for these get these into your strategy get them back tested here are an example of some of the uses now you can use these for take profit targets so you can scale out of a position a lot of people uh when their training start to use a trading stops which are you know um there's a pros and cons of using trading stock normally when you get hit on the trail you're giving something back but having these set targets uh can be a quite a profitable way to exit a position on the pivot Points um they can use for breakout entries if you break past one of these resistance zones or support zones uh look to trade uh the breakout you can use for entries for counter Trend and reversal I mentioned a moment ago the resistance zone three and the support zone three is often pretty well respected okay and again I encourage you to go way and do some back testing on that but certainly looking for counter Trend where the markets may be reversing and a lot of Traders base their strategies just on this um okay so what are the other um ways you can use for stop loss placement okay so you may have your stop loss below um you know certain pivot Points or above certain pivot Points I'm going to go on the charts and show you in a second um and you can use as a filter to keep out of low risk to reward trades so for example if you've got a major Pivot Point coming up um r1r2 R3 you may think hang on I'll wait until we clear that um before we get into the trade because you know I want to make sure that you're not getting um a risk reward or issue at less than say one to one okay so here are some examples in more detail on how you can use these pivot Points so you may have a trade entry um maybe perhaps at a pivot point so you put back into the pivot and that would be your entry daily pivots are well respected but you want to scale out of this trade so you might want to take your tp1 at R1 and then you move uh stop to break even perhaps tp2 could be at R2 tp2 and tp3 of course would be at um at uh R3 as well so these are lions that don't leave any discretion certainly if you were in Blue Sky trade where there's been no recent highs or lows or so forth using these um for targets can indeed remove all that ambiguity and remove all the emotions you know you've got them set in stone most Traders fail because they're putting too much ambiguity uh in to the trade now another common way of using these are for counter Trend or reversals so when you see one of these levels R1 or R2 R3 uh respected maybe a couple of times an indication that the markets are respecting that level here we go we're moving up into R1 and then off we go again up to R2 pulls back and then up to r two for a second time the alarm Bells could be showing here that this could potentially be a reversal Zone and of course if it's price action utility so we could take this trade lower as well so using these and they're going to fashion support and resistance could be good ways to help you get into those Trend reversal trades and indeed off it went uh to the bottom uh used for breakout entries bearing in mind that markets are respecting these you're waiting for the breakout and the retest of that zone for example we broke out we come back to retest that is a confirmation that R1 is respected and off you go again uh for a long trade it can be used for stop placement I know a lot of Traders struggle with placing uh the stops where to place them and so forth while using Define levels such as the pivot Points is a common way that Traders remove all that ambiguity so for example here you've got a long trade you're buying at R1 expecting the markets to go up where do you place your stop well if you're using R1 as your entry you could be using uh the Pivot Point as your stop you define your risk you position size accordingly and then all the ambiguity um has been removed and then we have um the filter out of low risk reward trades so for example here you'll see that R3 it's been respected one two three four times you know if you are looking at getting in on this trend would you be wanting to get in if R3 has been respected you most probably wouldn't you'd mostly wait uh for the breakout so you can see this is a good level of resistance that's been respected seriously go and check out R3 on your pivot point calculators um very rarely I think it's fair to say unless you have a really strong sort of macro news event uh do you hit past our really on a daily basis but hey what do I know go and check that out for yourself on your back testing and now of course as I said you don't need to be doing all this manually you can plug in some indicators on your mt4 and your trading view platforms that basically do all that for you okay so here we are on the trading view platform uh we're going to load up now a pivot point calculator simply just go up to the indicators and the usual way if you type in pivot Points in here or pivot and up will come a whole bunch of different Community scripts where people have loaded them up I've loaded up my own one here City Traders Floor Trader pivot Points uh stick it in there and you'll see it there on the daily chart now remember this is the daily chart so this is basically the pivot Points for the day so when you drill down to your trading time period so for example move this down to the uh the hourly chart you'll see the lines of course when the horizontal line starts that's the new trading day so basically we are well that many hours into the trading day at the moment the white line in the middle um is the main pivot point and then you've got the R1 R2 R3 above and um S1 S2 S3 below and you can just scroll back and see how well these have been respected in the past you know they're pretty well respected as you can see uh watch this this is the Euro Swiss let's just pull up another currency pair and see how it looks maybe the euro dollar um okay euro dollar one hour so for today for example we opened up here and we got up to resistance one and then basically rolled back off resistance one and then basically ended up um respecting the Pivot Point itself for period of time now just broken through and you can see yesterday for example we held at the Pivot Point uh we respected uh this Pivot Point here and roll back off but the idea of course is to play with this uh in your own time and see how relevant they may be to your Trading I think they're great uh for profit targets and indeed stock placement so as well I hope you enjoy it okay so if you found that useful sometimes the simplest of indicators uh are often their best and as a x Floor Trader I like to keep things really really simple you don't get more simple than the Floor Trader pivot Points if you like the video give me a thumbs up don't forget to subscribe to the channel if you don't already do so of 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