Floor trader pivots are one of the more popular pivot levels for active traders and are commonly used by floor traders in the trading pits.
The pivot points are calculated by using the previous days high, low and closing prices for establishing key intraday resistance and support levels. There are tons of pivot calculators that can quickly provide the levels with just a couple of clicks.
There are even some charting programs that will do this for you and plot the points on your chart like eSignal and Interactive Brokers.
Floor trader pivots consists of three resistance levels, three support levels and a daily pivot level. The daily pivot level is in-between the support and resistance levels and acts as kind of a sentiment indicator depending if prices are trading above or below it.
Above is an example of floor trader pivots on an $NVDA 5-minute chart. Notice how it acted as the first resistance (“R1”) level rejected higher prices during the initial morning push up at $109.02 and then as support as prices fell into the daily pivot (“PP”) level at $106.26.
When prices are trading above the Daily Pivot level then the sentiment can be thought of as being bullish while if prices are trading below it then the sentiment can be considered bearish.
If prices are successful in taking out a resistance or support level then there is a higher likelihood that prices will want to test the next level and so on. Just like other pivot points, when one is successfully breached it will reverse its role and become support if it was a resistance level or resistance if it was a support level.
Live Traders Pro Tip
I have found floor trader pivots to be even more useful when teamed up with some kind of oscillator like the MACD or a stochastic.
Waiting for the oscillator to reach over bought or over sold conditions while reaching a floor trader pivot is a great look for a possible reversal trade. It’s best to wait and see prices test the pivot and then fail and close back below/above the pivot.
You should also confirm it with your time and sales for increased size and trading activity to even further confirm the importance of the level.