Pivot point

A calculated level rather than an observed one. In its classic form, sometimes called the floor trader pivot, the previous period's high, low and close are added together and divided by three, and a symmetrical ladder of levels above and below is derived arithmetically from that figure and the same high and low. The device comes from open outcry trading, where a set of levels for the session ahead had to be computable by hand before the opening bell, and the whole calculation still fits on the back of a card.

Several published variants exist, among them the classic set, Woodie's, Camarilla, Fibonacci and DeMark. They differ in how heavily the previous close or open is weighted, so two providers publishing pivots for the same instrument on the same day can print materially different ladders and both be correct by their own method. The period matters as much as the method: daily levels come from the previous day, weekly from the previous week, and in a market that trades continuously the boundary of the previous day is a provider's server clock rather than a fact about the market.

The trip is expecting the arithmetic to know something. Nothing in the calculation observes order flow, positioning or liquidity, and the usual explanation for any effect is reflexive: the levels are said to matter because enough participants watch them. That argument is hard to test and remains disputed, particularly since the participants in question are watching different variants. What is not disputed is the mechanical consequence of the boundary problem: two providers with different daily cut offs publish different pivots for the same instrument on the same day, and neither is wrong.