# Pivot Points Strategy for WSDT

Day trading strategies for WSDT Oct 18, 2019

One of the well-known strategies which come up in most day trading discussions is the Pivot points strategy.

In this article, we will dissect this strategy and answer some very important questions such as:

- Is it a good strategy for WSDT?
- Is it possible to win using this strategy?
- What do WSDT mentors think about it?

## What is a Pivot Points Strategy?

Pivot points strategy is calculated from closing prices of previous trading sessions. In the case of stop loss and profit-taking, day traders can use the pivot point strategy to calculate their support and resistance levels as well. It can also be calculated on highs and lows. In most cases, they are used to predict support and resistance levels in a session, be it current or upcoming.

## How is the pivot points strategy used in day trading?

Financial analysts use different ways to calculate pivot points. We will talk about some of the common ways or, let's say, the most used among day traders.

Let's pick and discuss a method called the **five-point system**. This method is quite popular among day traders, especially the ones that use the pivot points strategy.

Basically, the five-point system is used to derive the pivot point by utilizing the high, low and close in conjunction with the two support and two resistance levels, which should make up a total of five points. All the data used for the five-point calculation must be from the previous day.

### This is how to calculate it:

**Step 1:** Find the pivot point by taking the average of the previous high, low and close.

Pivot point = Prev high + Prev low + Prev close, all divided by 3.

**Step 2:** Find the first support, multiply the pivot point by 2 and subtract the previous high from it

S1= (pivot point *2) -(prev. high)

**Step 3:** Find the second support, subtract the previous low from the previous high, then subtract it from the pivot point.

S2= Pivot points-(prev. high -prev. low)

**Step 4:** Find the first resistance, multiply the pivot points by 2 and subtract the previous low from it.

R1= (Pivot points*2) - Prev. low

**Step 5:** Find the second resistance, subtract the previous low from the prev high and add what you get to the pivot point.

R2= Pivot points + (Prev high - Prev low)

Another way of calculating the pivot point is by finding the average of yesterday’s high, yesterday’s low, yesterday’s close and today’s opening. That is, the sum of all the above-mentioned parameters divided by 4.

In day trading, the pivot system can show you the following important things:

**1.Market Trend**

If the pivot point breaks in an upward movement, then it is a major indicator that the market is bullish, if the pivot point breaks in a downward trend, then the market is bearish.

**2. Entry and Exits**

If the price of a stock breaks at a resistance level, a limit order must be put in. Stop-loss can be put near or at a support level.

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## Is the pivot points strategy popular among day traders

The main advantage of this strategy is that it helps you to make good trades based on market trends as we indicated earlier. Most traders use this method in a stable market environment to make substantial profits in day trading. This method is not aggressive, it allows you to determine where to exit and enter trades as well as note favorable points in placing stop losses.

In contrasting view, it is seen by some day traders as a very conservative style with few values or volumes of trade. This method can’t be used in certain market conditions, especially unstable or fluctuating ones.

A number of day WSDT mentors gave a thumbs down on this strategy, let’s see what they had to say:

*The Pivots Points strategy is the one that least adapts to my negotiation style since it is a technical analysis possibly more used for long-term trading. I use the pivot points as an **instrument or analysis to avoid entries in false opposing revolutions but not as strategies”.*

**Daniel (from I&CB)**

*“My least favorite strategy is pivot points. I just do not have a ton of experience using this method or strategy. I mostly stick with what has been working for me specifically, but that does not mean pivot points will not work for others”.*

## Is pivot points a good strategy for WSDT?

Most of the mentors describe this strategy as least preferred. For them, this method might not be very suitable for WSDT. These views emanate from the fact that the pivot point strategy has biased analytical procedures and calculations which is a good fit for long term trade and general market review.

Snippets of interviews with the WSDT mentors below will give you insights into what they really feel about this method being used in WSDT:

*“...therefore, it is not going to offer enough opportunities and those offered are not of quality”*

**Jose (from I&CB)**

“*Although it is a strategy used by many traders, the pivot points are used for swing or**longer time strategies, in the WSDT fast strategies are needed, such as scalping and**taking advantage of the platform to read the supply and demand.”*

**Daniel (from I&CB)**

## Final Thoughts

As we have highlighted throughout this article, a pivot point strategy has a somewhat strong analytical foundation and might be a good “tool” for analysis in combination with another strategy. It is used by many day traders around the world with a conservative approach in stable market conditions.

On the other end, many WSDT mentors don't have it in their preference list. This might be largely due to the fact that it doesn’t go with the fast pace and fierce productive nature of WSDT.