Which Pivot Points Are Best for Intraday And How to Calculate Them?

A pivot point is a technical analysis indicator that you can use to determine potential price levels and where the market might change direction. Each type of pivot point—Standard, Woodie, Camarilla, DeMark, and Fibonacci—has unique characteristics that cater to different trading styles and market conditions. This article will provide information on these various types of pivot points so you can have a good understanding of how to use them in your trading account.

I’ll answer the following questions:

1. What is a pivot point in stock trading?
2. How do support and resistance relate to pivot points?
3. Which pivot points are best for intraday trading?
4. How do you calculate standard pivot points?
5. What are Woodie pivot points and how are they different?
6. How do you calculate Camarilla pivot points?
7. What are DeMark pivot points and how are they used?
8. How can Fibonacci pivot points improve your trading strategy?

Let’s get to the content!

What is a Pivot Point?

Traders use pivot points to seek out price levels where the market trend could potentially change direction. These points are calculated based on the previous day’s high, low, and closing prices, providing a benchmark for future price movements. Pivot points are essential for identifying potential areas of support and resistance, helping traders make better decisions.

• Support Level: A price level where a stock tends to find buying interest.
• Resistance Level: A price level where a stock tends to find selling interest.
• Pivot Level: The central point calculated from the high, low, and close of the previous trading session.
• First Support/Resistance: Calculated based on the pivot point, adjusted by the previous session’s high and low.
• Second Support/Resistance: Further levels calculated for extended market movements.

Are you new to trading and looking for other technical indicators to use? Watch my video to learn about five of my favorites:

Best Pivot Points for Intraday Trading

Different types of pivot points serve different trading styles and market conditions. If you know which pivot point to use, you can significantly improve your trading performance.

The following are the different kinds of pivot points:

• Standard Pivot Points
• Woodie Pivot Points
• Camarilla Pivot Points
• DeMark Pivot Points
• Fibonacci Pivot Points

Standard Pivot Points

Standard pivot points are the most commonly used in trading, offering a straightforward way to identify key price levels. They are calculated using the average of the high, low, and closing prices from the previous trading session. 

How To Calculate Standard Pivot Points

To calculate standard pivot points, follow these steps:

1. Calculate the pivot point (P): P = (High + Low + Close) 3P = \frac {(High + Low + Close)} {3} P = 3 (High + Low + Close)​
2. Calculate the first support (S1): S1 = (2 × P) − HighS1 = (2 \times P) – HighS1 = (2 × P) − High
3. Calculate the first resistance (R1): R1 = (2 × P) − LowR1 = (2 \times P) – LowR1 = (2 × P) − Low
4. Calculate the second support (S2): S2 = P − (High − Low) S2 = P – (High – Low) S2 = P − (High − Low)
5. Calculate the second resistance (R2): R2 = P + (High − Low) R2 = P + (High – Low) R2 = P + (High − Low)

For example, if the high, low, and close prices of a stock were $150, $140, and $145 respectively, the pivot point would be $145. From this pivot point, you can calculate the support and resistance levels to guide your trading decisions.

If you’re unfamiliar with the concept of support and resistance, fear not! Watch my video to learn everything you need to know:

Woodie Pivot Points

Compared to standard pivot points, Woodie pivot points give more weight to the closing price, making them more sensitive to recent price changes. 

How To Calculate Woodie Pivot Points

To calculate Woodie pivot points, use the following formula:

1. Calculate the pivot point (P): P = (High + Low +2 × Close) 4P = \frac {(High + Low + 2 \times Close)} {4}P = 4 (High + Low + 2 × Close)​
2. Calculate the first support (S1): S1 = (2×P) − HighS1 = (2 \times P) – HighS1 = (2 × P) − High
3. Calculate the first resistance (R1): R1 = (2 × P) − LowR1 = (2 \times P) – LowR1 = (2 × P) − Low
4. Calculate the second support (S2): S2 = P − (High − Low) S2 = P – (High – Low) S2 = P −(High − Low)
5. Calculate the second resistance (R2): R2 = P + (High − Low) R2 = P + (High – Low) R2 = P + (High − Low)

For example, if the high, low, and close prices were $150, $140, and $145, the pivot point would be calculated with greater emphasis on the closing price of $145.

Camarilla Pivot Points

Short-term traders tend to use Camarilla pivot points because they better focus on predicting price reversals within a trading session. These pivot points use a unique formula and provide tighter support and resistance levels.

How To Calculate Camarilla Pivot Points

The Camarilla pivot point formula is as follows:

1. Calculate the pivot point (P): P = Close + (High − Low) × multipliersP = Close + (High – Low) \times \text {multipliers} P = Close + (High − Low) × multipliers

The multipliers vary, typically starting at 1.1 for the first level and increasing incrementally.

DeMark Pivot Points

When the market is volatile and price movements are significant, traders like to use DeMark pivot points because they focus on the relationship between the closing and opening prices of the previous period. This method alerts the trader to potential breakout levels.

How To Calculate DeMark Pivot Points

The calculation of DeMark pivot points involves specific conditions:

1. If the close < open: X = High + (2 × Low) + CloseX = High + (2 \times Low) + CloseX = High + (2 × Low) + Close
2. If the close > open: X = (2 × High) + Low + CloseX = (2 \times High) + Low + CloseX = (2 × High) + Low + Close
3. If the close = open: X = High + Low + (2 × Close) X = High + Low + (2 \times Close) X = High + Low + (2 × Close)

The pivot point (P) is then calculated as P=X4P = \frac{X}{4}P=4X​.

In this instance, if the high, low, and close prices were $150, $140, and $145 and the close was less than the open, you would use the first condition to calculate X and then determine the pivot point.

Fibonacci Pivot Points

Fibonacci pivot points employ the Fibonacci sequence, which is prevalent in nature and financial markets, to predict support and resistance levels. This method involves using Fibonacci retracement levels to determine key price points, giving traders access to a tool that identifies potential market turning points.

How To Calculate Fibonacci Pivot Points

The formula for calculating Fibonacci pivot points is:

1. Calculate the pivot point (P): P = (High + Low + Close) 3P = \frac {(High + Low + Close)} {3}P = 3 (High + Low + Close)​
2. Calculate the Fibonacci levels using the pivot point:

• First support (S1): P − (0.382× (High − Low)) P – (0.382 \ times (High – Low)) P − (0.382 × (High − Low))
• First resistance (R1): P + (0.382 × (High − Low)) P + (0.382 \times (High – Low)) P + (0.382 × (High − Low))
• Second support (S2): P − (0.618 × (High − Low)) P – (0.618 \times (High – Low)) P − (0.618 × (High − Low))
• Second resistance (R2): P + (0.618 × (High − Low)) P + (0.618 \times (High – Low)) P+ (0.618 × (High − Low))

With this type of approach, you would calculate the pivot point and then apply the Fibonacci levels to find the support and resistance points.

To use pivot points in your trading strategy, you’ll want a robust system at your fingertips that provides all the key data. 

StocksToTrade has the trading indicators, dynamic charts, and stock screening capabilities that traders like me look for in a platform. It also has a selection of add-on alerts services, so you can stay ahead of the curve.

Grab your 14-day StocksToTrade trial today — it’s only $7!

Best Intraday Trading Strategies Using Pivot Points

Pivot points are versatile tools that can be integrated into various intraday trading strategies. These are some of my favorite strategies for successful day trading.

• Pivot Point Bounce Intraday Trading Strategy
• Pivot Point Breakout Intraday Trading Strategy
• Combining Pivot Points and Moving Averages
• Where to Take Profit and Place Stop Loss

Pivot Point Bounce Intraday Trading Strategy

The pivot point bounce strategy involves trading when the price approaches and bounces off a pivot point level. This strategy relies on identifying entry points when the price action shows signs of reversal at these key levels.

• Entry Point: When the price touches a support level and begins to rise, consider entering a long position.
• Exit Point: Set a target at the next resistance level or a predetermined profit target.
• Stop Loss: Place a stop loss slightly below the support level to minimize potential losses.

Pivot Point Breakout Intraday Trading Strategy

The pivot point breakout strategy is used to capitalize on price movements when the market breaks through a pivot point level. I like to use this approach during periods of high volatility.

• Entry Point: When the price breaks above a resistance level, consider entering a long position.
• Exit Point: Set a target at the next resistance level or use a trailing stop to lock in profits.
• Stop Loss: Place a stop loss just below the breakout level to protect against false breakouts.

For traders looking to capitalize on volatility and quick market movements, you can combine the pivot point breakout strategy with a 1-minute scalping strategy. This approach involves identifying pivot points and using them to pinpoint breakout levels for scalping short-term profits. Learn more about implementing a 1-minute scalping strategy by visiting this scalping strategy guide.

Combining pivot points with moving averages can provide a more comprehensive analysis, helping traders confirm potential trade signals and improve accuracy.

1. Identify Trend: Use a moving average to determine the market trend.
2. Find Entry Points: Look for price action near pivot points in the direction of the trend.
3. Confirm Signal: Ensure the price is supported by the moving average to confirm the trade direction.

See the chart below which shows the differences between Simple Moving Averages of various time periods.

You can also combine pivot points with the Relative Strength Index (RSI) to improve your  intraday trading results. When the price nears a pivot point and the RSI indicates overbought or oversold conditions, it may signal a potential reversal. For more details on setting up your RSI for day trading, check out this resource on RSI settings for day trading.

Where to Take Profits and Place Stop Losses

Traders must manage their risk by setting profit targets and stop-loss orders when trading with pivot points.  

• Profit Targets: Set profit targets at the next pivot point level or a predetermined profit ratio.
• Stop Loss: Place stop-loss orders just below support levels or above resistance levels to limit potential losses.
• Adjustments: Adjust these levels based on market conditions and the specific pivot point strategy used.

Key Takeaways

Pivot points are invaluable tools for intraday traders, offering insights into potential support and resistance levels. To most effectively navigate the day trading market, you must know how to  choose the right pivot points and integrate them into your trading strategy.

There are a ton of ways to build day trading careers… But all of them start with the basics.

Before you even think about becoming profitable, you’ll need to build a solid foundation. That’s what I help my students do every day — scanning the market, outlining trading plans, and answering any questions that come up.

You can check out the NO-COST webinar here for a closer look at how profitable traders go about preparing for the trading day!

What kinds of technical indicators do you use? Write “I won’t trade without a plan” in the comments if you’re ready to trade the right way!

Frequently Asked Questions

How Can Pivot Points Be Used With Other Trading Strategies for Intraday Trading?

Pivot points can be combined with other technical analysis tools like moving averages, oscillators, and Fibonacci retracement to improve trading decisions. For example, using pivot points with a momentum oscillator can help confirm trade signals.

Are Pivot Points Applicable in Other Market Conditions, Such As Volatile or Stable Markets?

Yes, pivot points can be adapted to various market conditions. In volatile markets, traders may use tighter pivot point levels for more frequent trades, while in stable markets, broader pivot points can help identify longer-term trends. 

What Are Pivot Points in Stock Charts?

Pivot points are a technical analysis tool used in stock charts to identify potential support and resistance levels. They are calculated based on the high, low, and closing prices of a previous trading period. 

What Role Do Patterns and Timeframes Play in Pivot Points?

Patterns such as double tops or bottoms, and head and shoulders, can indicate potential pivot points. Different timeframes, like daily, weekly, or monthly charts, help traders identify pivot points that align with their trading strategy and investment goals.

How Are Pivot Points Used in Options Trading?

By analyzing pivot points on stock charts, traders can determine optimal entry and exit points for their options trades, enhancing their chances of profitability in the options market.

What Are Some Services That Integrate Pivot Points?

Pivot points can be integrated into various trading services, offering traders precise entry and exit points. enhancing automated trading systems and signal services. They can be applied across a range of products and securities.

How Do Pivot Points Affect Payment and Exchange Decisions?

Pivot points help traders identify key price levels, influencing payment and exchange decisions. They provide critical insights for executing trades in stocks and other investments.