Pivot points provide dynamic support and resistance levels that indicate where the market may turn around. Many traders, professional traders and everyday traders like me and you, use pivot points to help find these potential turning areas. And what I especially like about pivot points is that they are very, very simple to use!

So let’s dive in and talk about ways to use pivot points (PP) profitably.

1. You can simply add them to your trading chart. Just about every charting package will calculate these points automatically. Once you add them, it won’t take long before you see how clearly the market honors these levels.

2. You can use websites or free tools to calculate them yourself. Just do a simple search for ‘calculate pivot points’. There will be plenty of websites or apps that will calculate these levels once you type in the daily high and low prices.

3. You can calculate them manually. Calculating these points just takes a minute. There is not a whole lot of need to calculate them by hand unless you are just interested in doing so. Again, go back to your search engine and type ‘how to calculate pivot points’ to see the formula.

So how can you use these points to find profitable trades? Use them as support and resistance levels. See how the market reacts to them.

Does the price just completely blow through them? That means that the market is trending strongly and you should get on board.

Does the price stall? That means that the market is honoring these points, but it just doesn’t know how to react. Look for other signals that will tell you if the market will turn or continue forward.

Does the price turn around when it reaches the these points? That means that these levels have been respected, and the market isn’t strong enough to break them. Look to trade back to the central pivot point.