Best Pivot Point Indicator for MetaTrader 4 (MT4)
No one truly knows the source and the exact way of calculating these Pivot Levels. What is more important is that any trader can use these levels and establish the correct values for the Stop Loss and Take Profit orders. On the side, you can choose the required interval timeframe : The only thing you must do is to find these points at the chart and set them manually by the quotes.
The Pivots are no exception. These additional levels are not as significant as the main five but you still need to pay attention to them.
The reversal point within the trading session or day. The trend direction. There is a rule of determining the trend. If the market of the current trading day opens above the central Pivot Level, then you should better open long during this trading day. If the market opens below the central level, then you should better open short within this day. If the market opens above the level but breaks it top-down after that, you should be trading within the channel.
In this case, the new weekly market opened above the week Pivot Level. So you can expect an uptrend during the week. In general, the reference center and the R1 and S1 points are the most important from the point of the practical trade. How do you trade on these levels? First of all, you should determine how exactly the market opened about the Pivot. In the case it has opened above the Pivot, you should look for the opportunities to open long. After that, you may expect to reach the R1 or the S1 level independence of how the market has opened.
In our case, you can expect the price reaching the R1 level and a bounce or breakout after that: So you got a completely textbook case.
The price has broken through the R1 level and then you got a slight pullback to the broken level. At that moment, you definitely could have set a pending Buy order on the high of the retracement candlestick. Set the pending Stop Loss order at the minima plus a couple of points indent of the candlestick, which broke through the level.
In our case, the Stop Loss order was 27 points. You should note that the shorter the Stop Loss orders, the more often they are activated.
Therefore, if you like to give the price some time for action, you can set the Stop Loss order behind the nearest minima or maxima. On the contrary, if you prefer a high percentage of profitable trades, you may set the Stop Loss order behind the Pivot level. If the price crosses it, you can be sure that everything goes by the plan. I think you should divide the initial order into two parts for different goals. For the first order, set the Take Profit order at the R2 level and for the second one — at the R3 level.
When the first Take Profit order is activated, transfer the second one in the black and start moving it after the price. Quite often, by the time the market reaches the S2 and S3 or R2 and R3 Pivot levels, the market is already overbought or oversold. In this case, use these levels to close the positions instead of opening new ones.
Therefore, splitting the positions, partial closing and transfer of the remaining part in the black while reaching the R2 or S2 levels can many times save you from getting a Stop order. At the same time, you can still make good money on this approach as we have done in our example. This is the average number of points, which the chosen currency pair usually takes during the day. I advise you to determine it in the following way: The ATR indicator determines the tool volatility.
The ATR indicator determines the length of the day candles on the daily charts. The ATR with a period of points determines the average length of a day candle over six months: 20 working days a month multiplied by 6 months. Thus, you can set defer 80 points from the daily opening price. In our example, it matches the R2 level. Of course, this is not always the case so the average price movement should be taken into account in trading, especially in case of the intraday trading.
At least that will help you not to open long at the daily maximum and not to open shortly at the daily minimum. Also if the price goes for such a distance from the day opening level, you can consider it the signal to transfer in the black, for example, or close some positions. And if the R1 and S1 levels are not broken out or the price breaks through the Pivot Level in the opposite direction, you may think of entering the market at the price bouncing from these levels and further trading within the channel between the R1 and S1 levels.
Pivot Levels trading is very much the same as trading using classical support and resistance levels. As you see, the rules of the Pivot levels trading are very simple in theory. However, the pivot levels do not work out every time in the real market conditions. The price can fluctuate near the Pivot levels and sometimes it is very difficult to foresee which direction it will take. Sometimes the price stops before reaching a Pivot level and reverses in a few points from your goal.
In another case, for example, it seems that the Pivot Level seems to be quite a strong support level and you may open long. And right after that, the price reverses and moves down fast towards your Stop Loss order. Therefore, I suggest using the trading template designed to simplify your task as much as possible. Take a look at the weekly opening price. If it is below the Pivot Point, open short and vice versa.
Track the price. Wait until it reaches the S1 level to start opening short and opening long at the R1 level. If the price has crossed the Pivot level in another direction, trade within the channel.
In this case, stop the trade since the levels are quite far away and the price is very likely to bounce from them. Also the price has remained long enough within the channel and accumulated enough strength to keep moving.
Usually, the price pulls back to the level providing an opportunity to set a pending order. You may pick the S2 and S3, or R2 and R3 as your targets.
We recommend using the period of 24 for the M5, M15, H1, and H4 timeframes and the period of 20 for the D1 timeframe. While working on the trend, we advise you to enter the market with two orders. Close the first one at the S2 or R2 level. Transfer the second order in the black after closing the first one and pull up the Stop Loss order after the price. In case the price failed to reach the Take Profit order by several points and began to reverse, close the transaction manually not waiting for the order to activate.
I suggest taking only the S1 and R1 levels. I do not recommend the beginners to trade on the periods lower than the H1 period. Therefore, we will discuss this period as well since all the basic rules for the Pivot Points trading are applicable for any period. All you need to do is to pick the right Pivot period for each timeframe. Pick the month Pivot for the D1 period, the week Pivot for the H1 and H4 periods, and the day Pivot will be good enough for everything lower than the H1 period.
Example 1. The new week market opened below the level so seek for opening short at the S1 level after it is broken out.
The price breaks out the level at point 2, after which the price pulls back to the level at the next candle. The candle looks like a pin bar but we still let us say so set a pending order at the minima of this candle.
After that, the set order will be activated. In other cases, we would get a few extra opportunities to enter the market at points 3 and 4. If we set the Stop Loss order far enough the last maxima dovetails with the Pivot level in the example , we will reach the first goal at the point 6 the S2 level after the order is activated. After that, things may have gone in the black since the price has bounced from the S2 level for quite a long distance. Anyway, we would have gotten approximately a points profit using the half of the order as well as the second half would have been closed in the black.
Example 2. The market opened below the Pivot in the point 1. So open short. After that, the Pivot Level was broken out for buying at point 2. So now, we start trading within the channel and work on the bounce from the Pivot, S1 and R1 levels. The pending order was activated but did not reach the goal.
As they say, the bird in the hand is worth it. We got another opportunity to enter into the market with the pending Buy order and this time the price has successfully reached the goal. The level was broken out at the same point 5 so this time we should set the Sell order. This order was activated fast and has brought you 55 points while being on the market for about 1. There is nothing to be done, the market may be that way as well. However, at the same time, following the rule of premature closure, we could have finished it within just a day, the price almost reached the point 6 4 points from the target 12 hours before that and then reversed.
The level was broken out again at the point 6. Well, you know what to do. This time, the price had broken out the R1 level but then returned. Example 3. The week opened below the Pivot. The Pivot Level was almost broken out at the point 2. If this had happened, we would have started to trade within the channel.
Hourly Pivot Points with Color Filling MT4 Indicator
Whatsapp Print The Auto Pivot MT4 indicator is a custom trading indicator that is used to plot the daily, weekly or monthly pivots automatically. The Auto Pivot indicator is a handy tool for traders, especially those who prefer to trade with the pivot levels.
With an easy to use approach and simple configuration, the Auto Pivot MT4 Indicator automatically plots the specified pivot levels with ease — potentially saving you loads of time.
Double click on the AutoPivotIndicator from the indicators list and select any of the time frames for which you want the pivot levels to be calculated. You can choose from Daily, Weekly or Monthly or if need be, you can set all three timeframes to be shown on the chart. Therefore, traders prefer to wait for price to trade near one of the support or resistance levels before entering a position. Prices often tend to move back to the Pivot point and when there is a good trend established, prices often dip or rally to one of the support or resistance levels before resuming the trends.
Pivot points can be combined with other trading indicators such as moving averages or oscillators and can also be used with candlestick price action techniques for trading. There is not much of difference in the way the pivot levels are calculated as they often tend to represent a support or resistance price zone.
Entry Rule Long when price pull back to support level Short when price is approaching resistance level Exit Rule Exit long position when price approach next resistance level Exit short position when price approach next support level Stop Loss For long position, place stop loss below supporting pivot level.
For short position, place stop loss slightly above resistance level. However, the shorter the time frame, you will see more fluctuation and possibly more whipsaw which may cause small losses that can eat up your portfolio quickly.
We recommend that you use higher time frames like the 4H for better consistency. The Auto Pivot MT4 Indicator is definitely a very handy tool for traders based on the simplicity involved in loading up this indicator quickly. The pivot points comprise of three support levels and three resistance levels with a mid point known as the pivot point. In some cases, there can be as much as five support and resistance levels, but it is very rare that price action turns bullish to reach either of these pivot levels.
Time Lapse The other point is to consider the amount of time that passes after you have entered your position. If your position is sitting below or right around the breakout level 30 minutes after entering the trade — the stock is screaming warning signals.
Too Much Time Do not over think exiting bad trades. If you find yourself in a trade that is stalling or not holding a level, just exit the trade. Waiting around for something to happen can lead to more losses.
Beyond the money, the major issue you will face is the emotional turmoil of tacking such a loss. Remember, do not think — just close the trade! The next question you are likely to ask yourself is where will NANO stop?
Unfortunately, simply looking at the pivot points for one day gives you no way of making that determination. Multiple Days of Pivot Points As you can see in the chart, there are a number of resistance levels near our closing price on the day.
Like any other indicator, there is no guarantee the price will stop on a dime and retreat. The point of highlighting these additional resistance levels is to show you that you should be aware of the key levels in the market at play. You will need to look at the level 2 or time and sales to see which level you need to focus on. This is the real challenge. If you immediately sell you might possibly forego big profits.
As an option, you could sell out at the next resistance level up. You might be leaving money on the table, but there is a greater risk of being greedy and looking for too much in the trade. Placing Stops Trading with pivot points allows you the ability to place clear stops on your chart.
What you do not want to do is simply place your stops in line with the next level up or down. You have to take more care when identifying your stop placement. Remember, you are not the only one that is able to see pivot point levels. Anyone with a charting application can know the R1, R2 and R3 levels. So, how do you still protect your trade but without risking too much?
Beyond Key Psychological Price Levels For starters, you could place your stop just beyond the levels. In other words, you will want to hide the stop behind logical price levels.
Why at this level? Therefore, you will likely have a large number of stops right at the level. Therefore, if you place your stop slightly beyond this point, you might avoid being stopped out of the trade as a shake out.
Volume at Price Another method is to look at the amount of volume at each price level. If you are long and are eyeing an S1 level to stop the selling pressure, you can also see how much volume has been traded at a certain price level.
How to Trade with Pivot Points the Right Way
The idea is to then place your stop slightly below or above these levels. Volume at Price — Pivot Points In the above example, notice how the volume at the support level was light. This shows you that there was not a lot of selling pressure at this point and a rebound was likely to occur at this level. Next, notice how the price barely breached the S3 level and then reversed higher. For this type of setup, you want to see the price hold support and then set your target at a resistance level that has accompanying volume.
If you were long, a stop directly below the S3 level would have kept you in the trade. How to Practice with Pivot Points Hopefully you now have an intimate knowledge about Pivot Points: their formulas, strategies, and usefulness for day traders. As with any trading strategy, it takes time and practice to really gain the upper hand on the market. For this reason, there is no better way to practice Pivot Points than in a simulator. We suggest trying at least a trade sample of this strategy and analyzing those trades before putting real money to work.
External References. In other words, some of the most powerful trends are financial instruments returning to missed pivot levels.
One example could be to watch for 2 or more missed pivots in a row, followed by a reversal signal. The Fibonacci retracement levels is a popular indicator that uses horizontal lines to indicate where possible support and resistance levels are located.
Whenever Fibonacci levels line up with pivots, you have a reinforced price area. Customizing the Indicator — Inputs and Style If you double-click on either of the pivots, a window will pop up.
Below the lookback, you can see the time periods for which the pivots are calculated. The units are in minutes, and the great thing is that you can change the numbers to show whatever intraday pivots you need. Upon switching to the style tab, you can change what the lines look like.
You can also choose which pivots to show. However, both of these indicators can be used for trading intraday. The Rob Booker version is more responsive because it uses smaller timeframes for calculating the pivot points. This means not only that the pivots are closer to the price, but that they will be updated frequently throughout the day.
Most modern trading software, or platforms, have the pivot points indicator in their library.
Auto Pivot MT4 Indicator – Free MT4 Indicator
See below: How to use Pivot Points in Trading Pivot points are one of the best tools used to time entries and exits in any market. However, there is a lot of noise on when to buy with pivot points. Technical indicators are just there for guidelines. So, as a rule of thumb the KISS strategy keep it simple stupid most of the time is the best approach. Pivot point breakout trading. Determine short-term market trends. The trend is bullish if we break above Resistance 1. Conversely, the trend is bearish if we break below Support 1.
Intraday trend reversals. As for the entry and profit targets: Buy and sell at S3 R3 if the price is unable to move any further and close the trade by the end of the current trading session. All pivot points trading strategies revolve around these 5 trading principles. See below: How to Trade with Pivot Points Day Trading The most powerful way to day trade using pivot points is the pivot point bounce strategy and breakouts of the central pivot point.
Let me explain: Here is how to identify pivot point day trade setups using the central pivot point. Step 1: The market needs to start the new trading day consolidating above or below the central pivot point.
Step 2: If the market consolidates below the central pivot point we look to buy potential upside breakouts. On the other hand, if the market consolidates above the central pivot point, we look to sell any downside breakouts. See below: How to Trade with Daily Pivot Points The daily pivot points are one of the most accurate PP levels because they incorporate the end of day closing prices.
Let me explain why daily pivot points are so powerful. The close of the day is regarded as the most important price of all OHLC prices. The closing price is basically the settlement price that shows who won the bull-bear battle. So, the bottom line is this: Daily pivot points are more reliable than intraday pivot points.
If you day trade with pivot points make sure you go to settings and change the timeframe of the pivot points to daily. Now… Here is a trading edge to use the daily pivot points. See below: Daily Pivot Point Strategy in Forex The most powerful way to trade daily pivot points is to look after rejections of the central pivot point. Let me explain this type of pivot point trade setup: If during the trading day the market has established a strong bias above below the central pivot point we should expect any retest of the central PP to provide a rejection.