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2007.10.11 10:10

New article Trading Strategy Based on Pivot Points Analysis has been published:

Pivot Points (PP) analysis is one of the simplest and most effective strategies for high intraday volatility markets. It was used as early as in the precomputer times, when traders working at stocks could not use any ADP equipment, except for counting frames and arithmometers.

Pivot Points (PP) analysis is one of the simplest and most effective strategies for high intraday volatility markets. It was used as early as in the precomputer times, when traders working at stocks could not use any ADP equipment, except for counting frames and arithmometers. Analysis of this kind can often be found in a number of articles on technical analysis in the sections devoted to excursions into history. The main advantage of this technique is its computational efficiency that allows traders to make calculations mentally or on a sheet of paper.

Since four arithmetic operations are used in calculations, every trader using this technique always wanted either outrun the competitors or, at least, "outcalculate" them. Correspondingly, there are many formulas to calculate pivot points and support/resistance levels (see examples in the table below).

 Range Possible Formulas to Calculate PP RANGE: High - Low RANGE %: (High - Low) / (Previous Close) PP1=(H+L+C)/3 PP2=(H+L+O)/3 PP3=(H+L+C+O)/4 PP4=(H+L+C+C)/4 PP5=(H+L+O+O)/4 PP6=(H+L)/2 PP7=(H+C)/2 PP8=(L+C)/2 Change Change: Close - Previous Close Change %: (Close - Previous Close) / (Previous Close) Trend % Calculation: ABS (CLOSE - OPEN) / RANGE