Pivot points are elegant indicators that don’t necessarily come with the default settings of all trading platforms. The MT4 platform doesn’t offer pivot points, however, this doesn’t mean that the indicator can’t be uploaded.

To do that, first, you must search online for the Pivot Points indicator for MT4 and download it. Next, locate the downloaded indicator and copy-paste it into the Indicators folder in MT4. Finally, restart the MT4 platform, and Pivot Points should now appear under Custom Indicators. This whole process takes a few minutes, so we can safely say it is easy to upload a custom indicator onto the MT4 platform.

Pivot points and how to trade levels

Pivot points are used in intraday trading and are preferred by scalpers than swing traders or retail investors. But, as this article shows, swing traders and investors also use pivot points when scaling into a position.

There are many indicators that calculate pivot points and the formula differs from indicator to indicator. The aim here is to present the principle of trading with pivot points, rather than explaining how any specific indicator functions.

Pivot points show support and resistance levels, and each trading day has a neutral point, called the main pivot. In the above chart, it is marked with the letter P, and this is the neutral level for the USD/JPY daily chart. Anything below or above this level represents support or resistance. This indicator shows four different support levels (S1, S2, S3, S4), and projects four resistance levels on the upper side of the chart (R1, R2, R3, R4).

Pivot points define stronger support and resistance levels. For instance, scalpers perform short-term oriented trades and enter and exit the market multiple times during the day and will trade levels differently.

The idea is to go long when the price reaches S1 for the P level. Or, short when the price reaches R1 for the P level. However, if the price continues to S2 or R2, the support or resistance level becomes stronger. Usually, traders add to their initial position or, skip the S1 and R1 completely and only trade the S2 and R2. For the target, they use S1 or R1 to book half the position and trail the rest to the P level.

Swing traders and investors use the pivot points to scale into a position. For instance, let’s assume we have an Elliott Waves analysis telling us to go long on the USD/JPY pair. Typically, we want to achieve the best entry price, and for this reason, the volume can be split into multiple entries. Therefore, we will have an entry point for each support level; this is how you scale into a position.

Take-aways:

  • Pivot points are not included in the default settings of the MT4 platform.
  • Scalpers use pivot points for short-term oriented trades.
  • Swing traders and investors use pivot points to scale into longer-term positions.
  • The further the market moves, the stronger the pivot point support and resistance levels are.

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