Pivot Points, Effective Trading Strategy

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Bittime -  Pivot Points or Pivot Points is an important concept intradingthat can help traders identify potential levels of support and resistance. In this article, we will discuss in more depth what pivot points are in thecryptocurrency, how to calculate them, and how traders can utilize them to make better trading decisions.

What are Pivot Points?

Pivot points are important levels used in technical analysis to determine potential points of support and resistance in a particular trading period.

Pivot points are calculated based on the highest price (High), lowest price (Low), and closing price (Close) from the previous trading period. By understanding pivot points, traders can have a clearer view of the direction cryptocurrency prices are moving and identify potential trading opportunities.

Also Read: What is Insider Trading?

How to Calculate Pivot Points?

There are several commonly used methods for calculating pivot points, but the most popular method is the standard method. Below is the formula for calculating pivot points and related support and resistance levels.

Pivot Points (PP):

PP = (High + Low + Close) / 3

First Support Level (S1): 

S1 = (2 x PP) – High 

First Resistance Level (R1):

R1 = (2 x PP) – Low

Second Support Level (S2):

S2 = PP – (High – Low)

Second Resistance Level (R2):

R2 = PP + (High – Low)

Third Support Level (S3):

S3 = Low – 2 x (High – PP)

Third Resistance Level (R3):

R3 = High + 2 (PP – Low)

Also Read: What does Call Options mean when trading?

How to Use Pivot Points in Cryptocurrency Trading?

1. Identify Critical Levels

Pivot points help traders to identify important levels of support and resistance in a particular trading period. These levels can be used as a reference to determine entry and exit points from trading positions.

2. Confirm Trading Signals

When cryptocurrency prices approach pivot point levels, traders can look for confirmation from other technical indicators, such as Moving Averages or RSI, to validate potential trading signals.

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3. Risk Management

Pivot points can also be used as a reference for setting stop loss and take profit levels. By placing a stop loss below the support level or above the resistance level, traders can minimize the risk of loss in their trading.

4. Position Calculation

Traders can also use pivot points to calculate their trading positions, including optimal position sizes and desired risk-to-reward ratios.

Also Read: Basic Guide to Crypto Trading Strategies for Beginners

Advantages of Using Pivot Points in Cryptocurrency Trading

1. Simple and Easy to Understand

One of the main advantages of using pivot points is the simplicity of the concept. Traders, both just starting out and experienced, can easily understand how it works.

This is what makes pivot points popular among traders because they can be applied quickly and efficiently in technical analysis.

2. Identify Important Levels

Pivot points help traders to quickly identify important levels of support and resistance in a given trading period.

By having a better understanding of where these levels are located, traders can make better decisions about when to enter or exit a trading position.

3. Set Stop Loss and Take Profit Levels

One of the main uses of pivot points is as a reference for determining stop loss and take profit levels. Traders can use the support and resistance levels generated by pivot points as reference points to determine where they will place stop loss orders to limit losses and take profit orders to lock in profits.

4. Increase the accuracy of technical analysis

By utilizing pivot points, traders can increase the accuracy of their technical analysis. Pivot points can be used in conjunction with other technical indicators, such as Moving Averages or MACD , to provide additional confirmation of potential trading signals. This can help traders identify stronger trading opportunities and reduce the possibility of errors in decision making.

5. Adjustment to Market Volatility

The cryptocurrency market has high volatility and pivot points can help traders to adjust to rapid and sharp price changes. By having support and resistance levels determined by pivot points, traders can have a better framework for managing risk and making trading decisions in changing market situations.

Also Read: 7 Cryptocurrency Trading Strategies to Increase Profits

Conclusion

Pivot points are a useful tool in technical analysis for cryptocurrency trading. By understanding the concept of pivot points and how to calculate them, traders can identify important levels of support and resistance, validate trading signals, and manage risk more effectively. 

Although not the only indicator used in cryptocurrency trading, pivot points remain an important tool and can help traders achieve success in often volatile and dynamic markets.

How to Buy Crypto on Bittime

You can buy and sell crypto assets in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime , make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. Learn Complete Guide How to Buy Crypto on Bittime . 

Monitor price chart movements of Bitcoin (BTC) , Ethereum (ETH) , Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.

Also Read:

What Are Crypto Wallets?

What is Cryptocurrency Mining?

What Is Bitcoin and How Does It Work

DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.