MT4 Pivot Point Indicator … Have you ever been in a situation as a trader where you need to identify potential areas of resistance and support levels? While new traders may not understand what we mean, experienced traders should easily relate with us here.
If you have been in this kind of situation, what tool did you use to salvage the situation? Did you manually draw and plot on a chart to identify the support and resistance levels? If you did, that means you are really missing out on the benefits of MT4 pivot point indicator. Pivot Points are a no-brainer in this regard. They are mathematical calculations geared towards identifying potential areas of support and resistance. There are many Forex Indicators but the MT4 pivot point indicator is a powerfull one.
If you are still clueless on how to use the pivot points indicator for MT4, we have got you covered with this post. In this piece, we will walk you through what pivot points are, how to calculate them, as well as how to use pivot point indicator to get the best of the forex market. Let’s analysis further:
What Are Pivot Points?
Pivot points are areas in the MT4 chart where price may change its direction. Pivot Points are formed by calculation and added onto the chart as levels. They are similar to Fibonacci levels or the areas of resistance and support marked in the MT4 chart.
Pivot Points can be traded using two strategies – trading the breakout or trading from resistance/support. We will cover these strategies before the end of the article.
How to Calculate Forex Pivot Points
Even though it is laborious to manually calculate pivot points on the MT4 platform, it is still useful to know how pivot points are arrived at. Pivot Points Indicators do this on auto-pilot and present you with the results without wasting time. A major reason why they are so highly used when trading.
The mathematical formula used in calculating pivot points is (High + Low + Close) / 3 = PP (pivot point).
From the chart above, you can see that while pivot points are added to the chart, resistance and support levels are also included. The following formulas are used to calculate the first resistance and support levels:
- For first resistance level – (2 x PP) – Low
- For first support level – (2 x PP) – High
To calculate the second levels of support and resistance, the following formulas are useful:
- Second resistance level – PP + (High – Low)
- Second support level – PP – (High – Low)
Using a MT4 Pivot Point Calculator
While the MT4 indicators pivot points will automatically determine the pivot points, support and resistance levels, if you want to determine pivot points levels on certain markets, instead of manually doing the calculation, you can use a pivot point calculator.
There are several pivot points out there, but we recommend the use of free MT4 Pivot Point Indicator since they serve just the required purpose. Using the calculator, you need to enter all the required information in it, and it will display the different levels.
How to Trade Pivot Points
Pivot Points are widely used as resistance and support points in a chart. Traders used these points to look out for possible breakout trades. Like we mentioned earlier, there are two strategies to trade pivot points.
- Buying/selling from the pivot, support, or resistance levels
- Fast breakout trades when price breaks out of the pivot points.
The First Strategy
The chart above is a typical example of how to trade pivot points using the first strategy. When the price is lower than the pivot point, you can look to buy.
The Second Strategy
You can use this strategy when you are looking to play fast breakout trades as soon as the price breaks out of the pivot point.
Final Thoughts MT4 Pivot Point Indicator
MT4 indicators pivot points are an important tool for traders of all skill levels. It helps to determine the support and resistance levels in the MT4 chart. However, to consistently achieve winning trades, you need to deploy other trading strategies like candlestick patterns, technical analysis methods, or moving averages.
And if that seems not sufficient to you for making accurate trading decisions, then you should attend this link to be able to locate alternatives, which could act as a power booster when it comes to you securing profits from trading.