Do you need an "exlaination" or "expaination"? http://www.deltat1.com/Education/tools/pivot-calculator/index.htm http://www.futurestrade.com/
Pivot Point Reversal = Uptrend in play >>> Day with higher high and higher low, followed by a day with lower high and lower low - indicator of trendreversal or entry to trading range.
No, actually it's more like>>>> http://www.iespell.com/ dictionary: Etymology: Medieval Latin dictionarium, from Late Latin diction-, dictio word, from Latin, speaking Good luck in any event playing with Pivots! I use 'em as a guideline for "potential" Resistance/Support levels in conjunction with several other indicators. Don't get too wrapped up with'em.
Which markets do you trade? I think that the best expaination is a worked example in realtime but using day time frame data instead of the longer time frame data that I assume you use for longer term trading.
I understand the calculation and that they are used by traders typically for intra-day trading across a variety of markets. What is the basis for the calculations? Who developed these formulas and why? From casual observation of futures and currencies they certainly appear to be significant support resistance points. Is sort of the self fulfilling deal, where they become significant because a lot of people use them?
They are also called floor pivots and were developed by pit traders. These locals would do these (very simple) calculations and write them down on cards/paper or memorize them before they started trading in the pits each. It gave them resistance/support areas based on the extremes and close of the previous day. Yes, a lot of the strength behind pivots working are because there are enough people that still use them to make it self fulfilling. Pivot points can become a bit unreliable if you have a sudden spike in the previous day - i.e. the used to get the values to calculate the pivots. You can see why this would be so by looking at the formula and seeing that both the high and low contribute 1/3 of the value of the pivot point. IMO, trading off pivots become more powerful if you find clusters of support/resistance around the support/resistance/pivot line. I personally use Market Profile to find other s/r levels around the pivots and use pivots on both daily and previous week time frame.