ABCD of PIVOT POINT and pivot point calculator ✍️
Have you ever heard this sentence..
Market abhi support pe hai ?? Or market abhi Resistance pe hai ??
If yes , have you wondered what exactly it means? (pivot point calculator)
Who decide this support and resistance ?
How it helps to carry or square off your Long / short positions in stock / index ??
And most importantly, have you ever thought that this PIVOT POINTS not just tell you ongoing trend but can give you minimum 2-3% guaranteed returns in a week or sometimes Intraday?
What is PIVOT POINTS?
It’s a Technical Indicator which tells you where exactly more buyers (support) and more sellers (Resistance) are active.
2. It’s not following any previous price. It follows the current price of a stock, and that’s why it’s a leading indicator
3. As it follows the current price of stock /index, it helps you identify the right trend in the Market.
4. If you are holding any stock in your portfolio, then with the help of this indicator you can use Immediate support as a stop loss and Resistance as your target. If resistance is crossed with good volume, then that resistance becomes your support, also your new stop loss and you hold the position for the next Target.
5.Exactly the opposite process for carrying short positions, then resistance becomes your stop loss and support becomes your Target. If that support is broken, then it becomes resistance for stock /Index, in this case, your new stop loss, and you hold your SHORT position for the next support zone.
How to add PIVOT POINT Indicator in your UPSTOX or ZERODHA account ?
- Click on the Chart icon to open the chart.
2. Once opened you see a symbol with sign +fx , you have to click on it.
3. Simply search the name pivot points as mentioned in picture.
4. Once it’s done , you will see some RED , Blue and Black lines are drawn. What it suggest we will see. But first let’s see in Zerodha.
1.Open the chart of any stock or Index
2. Click on the +fx symbol and type the name PIVOT POINTS
3. Once it opened you can keep one colour for all support levels and another for Resistance levels.
4. Again , you will see some RED , Blue and Black lines are drawn. Let’s see what it imply .
Why use PIVOT POINT Indicator/pivot point calculator?
First, up all, let’s how does the chart of the particular stock look without the PiVOT point indicator.
Now, can you see this stock? Unless any MARUBOZU, shooting star, hammer or inverted hammer formed which gives you some indication of trend continuation or reversal. But most of the candles are indecisive, like Doji or spinning top. Also, in some cases after MARUBOZU candle if Doji formed that implies resistance of stock or, strong sellers. But you can’t see any support or Resistance here.
Without pivot points means without any pivot line , support and resistance. What it tells you ?
It makes you blank as no indication of price movement at all. No indication of Trend continuation or reversal. No indication of retracement in an ongoing trend.
Now let’s see the same chart after adding PiVOT POINT Indicator for pivot point calculator.
Now this is the same chart which made you blank and now we added pivot point indicators to it
Before we study them in detail , understand
1. Black line = PIVOT LINE
2. RED line = Resistance line
3. Blue line = Support line
Are these lines Randomly drawn or any calculations ? Those calculations should not be our concern , but just for knowledge purpose I can tell you it’s Very simple calculation . We will see it first and then we will analyze it on different stocks.
How to find Support and Resistance in any stock/pivot point calculator?
Pivot point calculator Lets see how to find Support and Resistance first .
1. PIVOT POINT (Central Black line) is nothing but
( HIGH +LOW+CLOSE /3 )
So if we take example , stock formed a green candle and it’s High is 120 , Low is 100 , close at 115.
Then pivot point is, 120+100+115/3
= 115 .
So Central Black line will be at this level of 115.
Now how to calculate support and resistance ,
( HIGH+ LOW +CLOSE /3)
– ( HIGH +LOW /2)
So in our case
( 120+100+115/3 ) – ( 120+100 /2 )
= 115- 110 = 5.
Note this number.
So now support and resistance will be like this ,
Support levels 5 point below pivot line like 110, 105, 100
Resistance levels will be 5 point above pivot line like 120,125,130
As simple as this. no big rocket science . Now let’s see use of pivot point calculator on stocks.
How to use PIVOT POINT and earn profit by using it?
Normally for intraday we refer 30 /15 min chart …Don’t go beyond 30 min for intraday
Here in this case for pivot point calculator
- On extreme left side of pic from Box 1 to Box 2
you can see it took support near 2400-2425 and went near 2500-2510.
So if we consider 💯 points thats approx 4% gain
2. Now Box 2 to 3
It made a fall from pivot line near 2510 to 2450 level
If we consider 50 points thats 2% gain.
3.lastly from box 4 to 5
Stock took support again near pivot line at 2486 and went upto 2547 . If we consider only 50 points . Still it’s 2% gain.
So 2-4 % gain intraday only by using pivot point indicator. But now comes crucial question exactly where to take entry and where to make exit????
For Entry and Exit Remember while Taking entry for stock to buy or short . , There must be proper BREAKOUT or Breakdown
That means closing has to be above or below with good volume.
3. Once price touches the next level on a pivot or goes near to it. you may exit with 2% gain as the first target or wait to see volume or Candlestick formations.
Let’s take recent example of Nifty bank chart.
- From Box 1 to Box 2
The nifty bank was near 22000 from where it took to support and went to 25000 which was immediate resistance. 3000 point movement is not just more than 10% in FUT but F&O can give big gain.
- Now at 25000, you can see a RED line which tells you it’s the resistance of index and so came the Fall, it crashed and went to immediate support near 21000. Again 4000 point movement in Nifty bank once it went down from resistance.
- Box 3 to 4 and then Box 5
Here it went from 21000 and didn’t stop at Box 4 but gave BREAKOUT and went up to 24300. So far 4000+ movement in Nifty bank.
Now, this movement prediction gives you huge gains in F&O trading, also it set your mindset about what’s going to happen ahead till we reach the next support or Resistance.
If we apply the same in NiFTy50 , Nifty Pharma , Nifty IT , Nifty Auto , Nifty FMCG then it can tell us about ongoing trends in a particular sector or the entire market. Isn’t it amazing ?? But like every indicator, even PIVOT POINT has some limitations as well.
Limitations of PIVOT POINT/PIVOT POINT calculator
Limitations of pivot point /PIVOT POINT calculator
- As I said it’s a leading indicator but you have to understand you can’t take risk of your money only on a pivot point. Very rarely it does reverse before hitting support or resistance line. Especially on event day or if stock is having some big news. So it’s always wise to pair it with other indicators. Like Bollinger band , MACD, Moving average, RSI etc.
2. Those who are trading in Options z you can’t apply this Indicator on CE or PE value of particular strike price. if you get BREAKOUT / BREAKDOWN. If you do so then Premium value of options may or may not follow pivot point indicator as Time factor involve in it (THETA).
Let’s say if You do so , You see Breakdown in NiFTy50 from support level and you buy Nifty 10500 PE @175
Then Nifty may slide and you may book profit. But if premium 175 may or may not follow same pivot point levels as time factor ( Theta ) involved.
What we learned so far in PIVOT POINT?
- It’s a leading Indicator that follows the current price and tells us about support ( strong buyers ) and resistance ( strong sellers ) of stock.
- For intraday, we follow below 30 min chart or even Hourly but not more than that.
- To find a trend of particular days/week/month or even year we strictly check pivot point Indicator on Daily chart or above.
- It’s very simple to plot support and resistance on the chart using pivot value, though calculation should not be our concern.
- Instead of blindly following PIVOT POINT it’s always wise to pair it with Candlestick, moving average analysis.
- To see BREAKOUT or BREAKDOWN we need a candle to close above/below Red / blue or black line with good volume.
- If you are a swing trader / short-term investor then what PIVOT POINT can do is simply magical but Discipline is the key. Where you take the risk as per your capital.
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