by In this article, I am going to give you a brief introduction or explanation of central pivot range CPR, What is the central pivot range (CPR)? How to trade CPR? How to Calculate Central Pivot Range (CPR) Indicator?
The central pivot range (CPR) indicator I’ll show you very briefly how it’s calculated you don’t really need to know how it’s calculated or at least you don’t have to memorize it but it is good to at least understand what it is and then I’ll show you what that might look like and where to find it because it’s not easy to find on the internet.
How to Calculate Central Pivot Range (CPR) Indicator?
Calculating the three central pivot range (CPR) and it’s similar to traditional pivot points. the traditional pivot points there are five of them but with the CPR central pivot range indicator, the basic format has three all right so calculating the three CPR pivot points is based on the previous day’s price ranges so you got your pivot and that is calculated by the high and this is from the previous day okay so look at you know yesterday’s prices you take the yesterday’s high plus yesterday’s low and yesterday’s closing price add them all and then take that number and divide by three that’s your pivot for today.
Then to calculate your bottom central pivot which is below the pivot that is yesterday’s high plus yesterday’s low price add them up and then take that number and divide by two and then to get the upper line the top central pivot you take the pivot you know the middle line which you already calculated above and then you subtract the bottom central pivot which you already calculated subtract and then whatever number you get now you add the pivot all right so that’s the top line there will be three lines.
I’ll show you what that looks like in a moment and where to find it if you google it you know maybe your trading platform has it that’s great if not then you can go to trading view there is a function section where you need to type central pivot range and then search.
Notice that three lines you know one two three all right you got your top your bottom and then your middle pivot, when it changes goes to three different prices and now you can find a monthly pivot you can make it a daily pivot as per your trading.
Perhaps use it for shorter time frames you could try it out although I usually have seen it for days you know they change the price every day or you could change it every week or every month whatever you like it’s totally your choice.
You might have to modify the script what I like about this one is that you can see it whoops you can see it right there in the script there it is right the pivot high plus low plus closed divided by three and then you got your bottom right and then your top and that’s the formula that we know.
You know if you’re going to use a script check the formula make sure that it is accurate all right and then adjust it to the time frame that you like to trade on.
How to trade Central Pivot Range (CPR) Indicator?
There’s no definite way of using it a lot of people use the pivot you know just like traditional regular pivot points a lot of people use them as support and resistance. for example, if the price is down and then if it breaks through the bottom of the three lines the bottom pivot or the lower pivot, if it breaks through it strongly if it closes above it with heavy volume then you might go long.
Your profit target should be at least a 1:2 risk-reward ratio or can trail stop loss as per your risk management.
if you’re shorting the other way around if the price falls hard and fast and with heavy volume, you know below this upper line here then you might take a short position now shorting is not for most people shorting can be a dangerous game can be risky so please be careful with shorting and you don’t have to do it at all by the way.
If you are the type of person who likes to go short, if you’re willing to take that risk then if the price goes below with high volume and closes below strongly with a big red candle then you might take a short position. Your profit target should be at least a 1:2 risk-reward ratio or can trail stop loss as per your risk management.
How to trade Central Pivot Range (CPR) using Pivot Points Indicator?
Central Pivot Range (CPR) mostly acts as a support and resistance level. Most of the Domestic institutional or foreign institutions used CPR as support resistance.
If the price is above the central pivot range (CPR) then they will look for only long buildup and avoid short positions and if the price is trading below CPR then they will look for the only short buildup and avoid long positions. This is so simple strategy anyone can use and generate good income.
In the above chart, you can see where you need to take profit and where you need to keep stop loss. Although when the price is above CPR your stop loss should be a middle line if it’s wide CPR. If it’s narrow CPR then you should keep stop loss below CPR.
Target should be pivot points resistance R1 book some from profits here and rest you can trail for next target that is for resistance2.
You know regular traditional pivots, what I like about the traditional pivots is that often times you’ll get five lines instead of just three and when you have five lines five pivot points then you can use them it’s easier to use them not only as profit targets but also you can use them as stop losses.
It’s not so easy when you only have three lines to you know to figure out what your stop-loss is going to be necessary all the time.
Conclusion
Central Pivot Range (CPR) Indicator for day trading is usually the best trading strategy to take the trade. This setup is very easy and simple to use just you need to keep patience and let your setup form and then you can enter your positions. Stoploss should be the low or high of the range inside the bar candle for uptrend and downtrend and the target would be as per your risk-reward ratio. One should follow the Risk Management, Money Management, and Fear and Greed concept of the market to avoid big losses.
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