MT4 Pivot Point Programming
Pivot Points, also known as floor trader pivots, have been around for quite some time. The term floor pivots are derived from the activity of actual traders, on the exchange, on a real floor were they make trades based on specific areas of support and resistance. Pivot points are calculated and used as a guide of where the exchange members, mostly for commodities and currencies “wanted” or expected to maintain pricing.
Calculating Pivot Points
There are various methods for calculating pivots. Pivots points may also be calculated using different time frames. The most common method of calculation uses a five-level system. Traditionally, pivots points are based on the previous time frame. For example, when calculating daily pivots the previous days open, high, low, and close values may be used for the current daily pivots. The most common equations are:
R2 = P + (H – L) = P + (R1 – S1)
R1 = (P x 2) – L
P = (H + L + C) / 3
S1 = (P x 2) – H
S2 = P – (H – L) = P – (R1 – S1)
Whereas R’s represent resistance levels, S’s represent support levels, and the P represents the primary pivot point. This primary pivot point is usually considered the most important pivot, especially in the forex market. The symbols H, L, and C represent the previous days High, Low and Close respectively. We have made proven improvements to this formula and the combination of time frames with our proprietary pivot point system.
Pivot Points Strategy
The most straightforward forex pivot point strategy and perhaps the most common is to use pivot points as support and resistance areas and the primary pivot as a trend direction indicator. For example, when the currency rate crosses the primary pivot from below, it may provide clues that the trend for that forex pair is increasing – hinting for a possible long entry while R2 and S2 are the extreme levels of support and resistance. When the forex pair’s rate reaches one of these areas, traders will look for clues of a bounce, indicating a reversal, or a breakthrough indicating a continuation of the trend.
Custom Pivot Points
Programming pivot points is one of our specialties and perhaps where we have the most experience compared to any other indicator. With our expertise, we can offer suggestions to improve your existing forex expert advisor for MetaTrader 4 or MetaTrader 5 or provide unique ways to use pivot points. Our usage of pivot point programming goes significantly beyond the standard calculations and time frames. Most of our calculations and applications for pivot points as they relate to the foreign exchange market are proprietary and represent almost two decades of research and use.