Day trading, formula can help you

Dear members,We never used formula given because we use charts. Lot of peoples is using this technique so we hope it can help you. As with other methods of trading, comfort will be achieved only through constant practice.There are many among my day trading friends who do not peruse graphs during the trading day. Just watching the price and volume movement is sufficient to tell them which stock is going to break-out and they trade accordingly. The pivot point trading system is designed for the less clairvoyant day traders like us. This is a simple trading system that can enhance the trading of those who do not want to get distracted with intra day graphs. All that is needed is the previous day's high, low and closing price and voila, we have an entire range of supports and resistances that can be found invaluable in day trading. The USP of pivot point trading is that it is predictive in nature i.e. it can forecast the range for the trading day ahead. The formula for calculating the pivot point is as follows, R2 = P + (H - L) = P + (R - S1)R1 = (P * 2) - LP = (H + L + C) / 3S1 = (P * 2) - HS2 = P - (H - L) = P - (R1 - S1). H stands for the previous day's high. L stands for the previous day's low and C represents the previous day's close. The S and R are the supports and resistances. Many variations are available for the above formula. Some formulas include the opening price of the current trading day. Other formulas compute more than two supports and resistances

Free online calculators for calculating the pivot points are available on the web, which can be used to calculate the pivot points. So, how does one use these pivot points? If the price opens above the pivot point and starts moving upward, then a long position can be initiated with a stop just below the pivot point and with the R1 as the target. If the price crosses above R1, that can also be an entry level with a stop just below R1 and R2 as the target. Generally, no buy is initiated near R2, as it is the upper limit of the trading range for the day. In case the price reverses from R1 or R2, it can be the right place to short the stock with a stop just above R1 or R2 with the target being the support just below. In the similar way, if the price opens below the pivot point, it is a bearish signal and a short position can be initiated with a stop just above the pivot point and the target being S1. Price moving below S1 and moving towards S2 would also be a selling level. Selling is generally not done near the S2 as it is the lower boundary of the day's trading range. Price reversing from S1 or S2 can be used for initiating buy calls with the target being the level just above. Traders who peruse charts can use pivot points in association with other technical tools to decide whether to play long or short.it is possible to calculate more than two supports and resistances around the pivot. We give below a formula that calculates three resistances and three supports: R3 = H+2 X (P - L) R2 = P+ (H - L) = P + (R1 - S1) R1 = (PX2) - L P = (H+L+C)/3 S1 = (PX2) - H S2 = P - (H - L) = P - (R1 - S1) S3 = L - 2 X (H - P) P = Pivot point, R1 = resistance 1, R2 = resistance 2, R3 = resistance 3, S1 = support 1, S2 = support 2, S3 = support 3, H = high, L = low.