Pivot points are essential tools for intraday traders, providing predefined support and resistance levels that help anticipate market movement. The pivot point scalping strategy focuses on quick trades around these levels, aiming to capture small but consistent profits throughout the trading day.

In this article, we explain how the pivot point scalping strategy works and how to apply it successfully for high-frequency, low-risk trading.

What are Pivot Points?

Pivot points are calculated based on the previous day’s high, low, and close:

• Pivot Point (P): (High + Low + Close) ÷ 3
• Support Levels (S1, S2, S3): Calculated below the pivot point.
• Resistance Levels (R1, R2, R3): Calculated above the pivot point.

These levels act as dynamic support and resistance, helping traders predict potential turning points.

Why the Pivot Point Scalping Strategy Works

• Predefined Levels: Eliminates guesswork and emotional trading.
• Market Predictability: Many traders watch pivot points, making them self-fulfilling.
• Perfect for Scalping: Small, consistent moves around pivot levels offer frequent trading opportunities.

How to Set Up Pivot Points for Scalping

Here’s how to apply it:

1. Add a pivot point indicator to your chart.
2. Use daily pivot points for intraday scalping.
3. Focus on short timeframes like the 1-minute, 5-minute, or 15-minute charts.

Standard pivot point settings based on the previous day’s data work best.

How to Trade the Pivot Point Scalping Strategy

Here’s a structured method:

1. Entry Strategy

• Buy at Support: Enter a long trade when the price tests and bounces from a pivot support level (S1, S2, S3).
• Sell at Resistance: Enter a short trade when the price tests and rejects from a pivot resistance level (R1, R2, R3).

Look for confirmation using candlestick patterns (like pin bars or engulfing candles) at the pivot levels.

2. Stop-loss Placement

• Place your stop-loss just beyond the pivot level you are trading off.
• For example, if buying at S1, place the stop slightly below S1.

This ensures tight stops, ideal for scalping.

3. Profit Target

• Aim for small, quick profits.
• Set your target near the next pivot level or use a fixed target, such as 5 to 15 pips, depending on the asset’s volatility.

A 1:1 or 2:1 risk-reward ratio works well in scalping.

4. Risk Management

• Only risk a very small percentage of your trading capital per trade.
• Scalping requires discipline to cut losses quickly and protect profits.

Best Practices for Pivot Point Scalping

• Trade During High Volatility Sessions: Focus on the London or New York sessions for more liquidity and cleaner moves.
• Use Tight Spreads: Scalping requires brokers with low spreads to maximise profitability.
• Combine with Momentum Indicators: Tools like RSI, Stochastic Oscillator, or MACD can help confirm quick reversals at pivot points.

Pivot Point Bounce vs. Breakout

• Bounce Trading: Trade the bounce off pivot levels when price respects the level.
• Breakout Trading: If price breaks a pivot level with strong momentum, scalp in the direction of the breakout.

Adjust your approach depending on the market behaviour at the pivot point.

Common Mistakes to Avoid

• Overtrading: Only trade high-probability setups around pivot levels.
• Ignoring Spread Costs: High spreads can erode scalping profits.
• Trading During Low Volatility: Avoid trading during quiet market hours where pivot levels might not hold.

Advantages of the Pivot Point Scalping Strategy

• Clear Trade Levels: Predefined areas for entries and exits.
• High Frequency: Multiple trading opportunities per day.
• Works Across Markets: Suitable for forex, indices, commodities, and crypto.

Conclusion

The pivot point scalping strategy offers traders a fast-paced, structured way to profit from short-term market moves. By trading around key pivot levels, using tight stops, and managing risk carefully, scalpers can build consistent profitability over time.

To master scalping strategies like pivot points and learn professional trading techniques, explore our expert Trading Courses designed to help you trade with greater speed, precision, and confidence.