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How do YOU calculate Pivot Points?

  • #1
  • First Post: Edited 1:12pm Jun 25, 2007 11:18am | Edited 1:12pm
I'd like to see if we can form a consensus on how to calculate pivot points.

Please post:

1. The formulas you use.
2. Where you got that method of calculating them.
3. Comments, notes, insults, etc.

// -------------

Here's mine:

R4 = MEAN + HIGH - LOW
R3 = R2 + ((R4 - R2) / 2)
R2 = (MEAN * 2) - LOW
R1 = ((R2 - MEAN)/2) + MEAN

MEAN = (HIGH + LOW + CLOSE) / 3

S1 = (MEAN - (MEAN - S2) / 2)
S2 = MEAN * 2 - HIGH
S3 = S2 - ((S2 - S4)/2)
S4 = MEAN - HIGH + LOW

These came from Aden Rusfeldt's course "Currency Trading Made Easy", and he specifically said that this was the "right way" to calculate them. He can't be reached for comment right now......

Note that the mean, R2, R4, S2 and S4 are calculated from price. The other pivots are just calculated to be halfway between.

If one substitutes the formula for MEAN into the equations where MEAN is used, you find that none of it really makes much sense. Unless it's over my head, which a lot of things are.

for example,

R4 = ((4 * HIGH) - (2 * LOW) + CLOSE)) / 3

and

R2 = ((2 * HIGH) - LOW + (2 * CLOSE)) / 3
  • #2
  • Jun 25, 2007 12:10pm Jun 25, 2007 12:10pm
Quoting blueruby
I'd like to see if we can form a consensus on how to calculate pivot points.

Please post:

1. The formulas you use.
2. Where you got that method of calculating them.
3. Comments, notes, insults, etc.

// -------------

Here's mine:

R4 = MEAN + HIGH - LOW
R3 = R2 + ((R4 - R2) / 2)
R2 = (MEAN * 2) - LOW
R1 = ((R2 - MEAN)/2) + MEAN

MEAN = (HIGH + LOW + CLOSE) / 3

S1 = (MEAN - (MEAN - S2) / 2)
S2 = MEAN * 2 - HIGH
S3 = S2 - ((S2 - S4)/2)
S4 = MEAN - HIGH + LOW

These came from Aden Rusfeldt's course "Currency Trading Made Easy", and he specifically said that this was the "right way" to calculate them. He can't be reached for comment right now......

Note that the mean, R2, R4, S2 and S4 are calculated from price. The other pivots are just calculated to be halfway between.

If one substitutes the formula for MEAN into the equations where MEAN is used, you find that none of it really makes much sense. Unless it's over my head, which a lot of things are.

for example,

R4 = ((4 * HIGH) - (2 * LOW) + CLOSE)) / 3

and

R2 = ((2 * HIGH) - LOW + (2 * CLOSE)) / 3
I have created a spreadsheet based on your formula. It seems OK. Don't know if the results are accurate. Anyway the MS Excel spreadsheet is not attached as FF don't seem to allow this type of file.
If you would like it email me privately I will try to find a way to get it to you.

Also, if you use a metatrader platform, there is a metatrader mq4 indicator that calculates pivot points. This is attached.
Attached Image
Attached File(s)
File Type: mq4 Pivot Lines.mq4   14 KB | 643 downloads
  • #3
  • Jun 25, 2007 1:02pm Jun 25, 2007 1:02pm
I obviously needed to add the inflection, as in "how do YOU calculate pivot points?"

(sigh) OK, I'm game, I'll do the work.

Formulas:

R3 = MEAN * 2 + (yesterday_high-(2*yesterday_low))
R2 = MEAN + (yesterday_high - yesterday_low)
R1 = MEAN * 2 - yesterday_low

MEAN = (yesterday_high + yesterday_low + yesterday_close) / 3

S1 = MEAN * 2 - yesterday_high
S2 = MEAN - (yesterday_high - yesterday_low)
S3 = MEAN * 2 - ((2* yesterday_high)-yesterday_low)

H4 = (yesterday_high - yesterday_low)*0.55 + yesterday_close
H3 = (yesterday_high - yesterday_low)*0.27 + yesterday_close

L3 = yesterday_close-((yesterday_high - yesterday_low)*0.27)
L4 = yesterday_close-((yesterday_high - yesterday_low)*0.55)

M5 = (R2+R3)/2
M4 = (R1+R2)/2
M3 = (MEAN + R1) / 2
M2 = (MEAN + S1) / 2
M1 = (S1+S2)/2
M0 = (S2+S3)/2

Where I got them: from the mq4 file attached above.

Comments:

This thing plots a lot of lines.

There were other formulas for R1, R2, S1, S2 that were commented out.

R1 for the metatrader program is the same as R2 for the Aden method
S1 metatrader --> S2 Aden

MEAN is calculated the same except the mq4 file calls it "P"
  • #4
  • Jun 25, 2007 1:10pm Jun 25, 2007 1:10pm
From another indicator by "Habeeb".

Pivot = ((YesterdayHigh + YesterdayLow + YesterdayClose)/3);

R3 = (YesterdayHigh + (2*(Pivot-YesterdayLow)))
R2 = Pivot+(R1-S1);
R1 = (2*Pivot)-YesterdayLow;

S1 = (2*Pivot)-YesterdayHigh;
S2 = Pivot-(R1-S1);
S3 = (YesterdayLow - (2*(YesterdayHigh-Pivot)));

Where from - see above.

Comments:

R1 (habeeb) = R1 metatrader = R2 Aden
S1 habeeb = S1 metatrader = S2 Aden

Pivot (habeeb) = P metatrader = MEAN (aden)

These are the only consensus so far that I've spotted.
  • #5
  • Jun 25, 2007 6:25pm Jun 25, 2007 6:25pm
From Investopedia writeup by Justin Kuepper. He mentions that there are many ways, the most common of which is the five-point system, using the following formulae:

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)

Notes: These are the same as Aden's formulae, but missing the extra points halfway between S1 and P, and between S1 and S2.
  • #6
  • Jun 25, 2007 6:29pm Jun 25, 2007 6:29pm
http://www.fxstreet.com/forex-tools/...nt-calculator/

These guys use the same formulae as the "habeeb" mq4 file.
  • #7
  • Jun 25, 2007 6:53pm Jun 25, 2007 6:53pm
OK, here's how they stack up. If we use the Investopedia five point as the baseline, and line everything up, we can see that Aden used the R1, R2, S1, S2 and placed intermediate steps halfway between. The other popular set of calculations (also given by Mark McRae - google "pivot points") uses the five points and adds a set beyond at top and bottom.
Attached Image (click to enlarge)
Click to Enlarge Name: Pivot points.jpg Size: 51 KB
  • #8
  • Jun 25, 2007 11:45pm Jun 25, 2007 11:45pm
Not what you asked for but could be of assistance for some newbs
Attached File(s)
File Type: zip PivotCalculatoR.zip   17 KB | 855 downloads
  • #9
  • Jun 26, 2007 12:29am Jun 26, 2007 12:29am
I tried to upload an XLS spreadshhet for you all, BUT FF doesn't have that option
  • #10
  • Jun 26, 2007 12:40am Jun 26, 2007 12:40am
Is it not just (H+L+C)/3 of yesterdays bar giving you todays pivot, then you take yesterday range spread it evenly over todays new pivot and then just use .5 and .618 and 1.0 as your s/r levels?
  • #11
  • Jun 26, 2007 5:06am Jun 26, 2007 5:06am
Quoting creztor
Is it not just (H+L+C)/3 of yesterdays bar giving you todays pivot, then you take yesterday range spread it evenly over todays new pivot and then just use .5 and .618 and 1.0 as your s/r levels?
Thanks for the input. I haven't seen this method. Where did you get it?
  • #12
  • Jun 26, 2007 5:10am Jun 26, 2007 5:10am
I think I like the Mark McRae method. That's not really his method, he got it from somewhere I'm sure, but that's where I found it, on his site when I googled pivot points.

Attached is a SCRIPT that will put the lines on once. I just reprogrammed it to the above method. I programmed this a long time ago and don't remember how it works exactly. I think if you run it again tomorrow, then today's lines will disappear and it will replot.

It uses the broker's start/stop time for daily bars as the start/stop times for the pivots.

Interbank uses midnight GMT so this turns out right.
Attached File(s)
File Type: mq4 Daily_Pivot Points 2.5.mq4   2 KB | 611 downloads
  • #13
  • Jun 27, 2007 3:10am Jun 27, 2007 3:10am
Quoting blueruby
I think if you run it again tomorrow, then today's lines will disappear and it will replot.

.
WRONG.

This was one of my very first programs. sorry bout that.

I've fixed it so it does do as stated above.
Attached File(s)
File Type: mq4 Daily_Pivot Points 2.6.mq4   3 KB | 660 downloads
  • #14
  • Edited 7:01pm Jun 27, 2007 6:55pm | Edited 7:01pm
Quoting bazza
I tried to upload an XLS spreadshhet for you all, BUT FF doesn't have that option
http://spreadsheets.google.com/pub?k...kjtfWYEexIYFEA


I uploaded my spreadshheet which the Peter Baine system uses, & it is there for you all to use, just overwrite the values that are there & type in the previous days Open, high, Low & close for daily pivots, previous weeks for weekly & previous months for monthly, previous years for yearly.

Note- if several of you access it at the same time, it will be frustrating, it will change ,as I know nothing about web design, so keep an eye on it & save it to a file or copy & paste it somewhere as soon as you have it.

Enjoy,

Bazza
  • #15
  • Jun 28, 2007 12:48am Jun 28, 2007 12:48am
Do people still use pivot points? I learned how to use support/resistance lines and they are basically like your own pivot points. You do not need to use a mathematical formula you have the freedom to place lines in the places they are needed. Pivot points are too restrictive and in my opinion they do not help too much the only support they provide is exists because many retail traders used them. They key word is retail traders because I know a person who works in a bank and he assured me that no bank uses pivot points.
  • #16
  • Edited 2:00am Jun 28, 2007 1:31am | Edited 2:00am
Quoting blueruby
I think I like the Mark McRae method. That's not really his method, he got it from somewhere I'm sure, but that's where I found it, on his site when I googled pivot points.

Attached is a SCRIPT that will put the lines on once. I just reprogrammed it to the above method. I programmed this a long time ago and don't remember how it works exactly. I think if you run it again tomorrow, then today's lines will disappear and it will replot.

It uses the broker's start/stop time for daily bars as the start/stop times for the pivots.

Interbank uses midnight GMT so this turns out right.
Thats what I use in Fib Trader. The mark McRae method that you mentioned and someone posted above looks a lot like Dynamic Range in Fib Trader and its also very useful, however so is the other method Dyn Fib Range which is the info I posted about about using .5 .618 etc. Depends on what you prefer I guess.
  • #17
  • Jun 28, 2007 1:35am Jun 28, 2007 1:35am
Quoting Groovenator
Do people still use pivot points? I learned how to use support/resistance lines and they are basically like your own pivot points. You do not need to use a mathematical formula you have the freedom to place lines in the places they are needed. Pivot points are too restrictive and in my opinion they do not help too much the only support they provide is exists because many retail traders used them. They key word is retail traders because I know a person who works in a bank and he assured me that no bank uses pivot points.
I think if you use the pivots of the 2 timeframes above what you look at you may notice a few interesting things. For me personally they offer very valid areas of support/resistance. Again each to their own we all trade differently.
Attached Image
  • #18
  • Jun 28, 2007 2:04am Jun 28, 2007 2:04am
Quoting Groovenator
Do people still use pivot points? I learned how to use support/resistance lines and they are basically like your own pivot points. You do not need to use a mathematical formula you have the freedom to place lines in the places they are needed. Pivot points are too restrictive and in my opinion they do not help too much the only support they provide is exists because many retail traders used them. They key word is retail traders because I know a person who works in a bank and he assured me that no bank uses pivot points.
Groove,

Pivots work very well with all of the US futures markets, like the ES, ER, NQ, etc. I do use them on the EC and JY as well, but they aren't as accurate. The reason may be because the forex markets and their derivatives trade pretty much 24 hours a day, and each money center uses different opening and closing times to set the H/L/C for the pivot calculations. I took a course of John Person (former floor trader, author, teacher, CNBC guest), on pivot points and other trading setups, and he uses the NY settlement times as the start and stop of a trading day to set his forex pivots. Asia may use their settlement time, Europe another, etc. So you could in theory have (7 * 4 = 28) different pivot lines per forex chart. Kinda like driving down Broadway against the traffic lights.

But they DO work VERY well with the equity futures, bonds, etc. And I do mean VERY well.

CarlC
  • #19
  • Aug 7, 2007 8:30am Aug 7, 2007 8:30am
Quoting CarlC
The reason may be because the forex markets and their derivatives trade pretty much 24 hours a day, and each money center uses different opening and closing times to set the H/L/C for the pivot calculations.
This is an excellent observation. Nearly every post and every indicator I've seen picks different times.
  • #20
  • Aug 7, 2007 8:48am Aug 7, 2007 8:48am
Some like to calculate 3 different pivots for the 3 different trading zones.

Me I just like to watch price.
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