I like to trade using lines. Lines define support and resistance areas. Lines can be straight, curved, horizontal, vertical or angled. I see them as magnet areas and action/reaction areas. They attract price to it and when price gets there we get a reaction. Pause sometimes but then repelled back from where it came or allowed to pass through and on to the next magnet. 

Floor Trader Pivots are calculated many ways. I use the calculation used by most traders. I don't feel there is any magic to the calculation. The effectiveness is a self fulfilling prophecy concept. The more people watching a line the more dependable the reaction.

forget where this came from

Floor Traders Pivot are a well-known technique used by floor traders (locals) and market makers in the trading pits to calculate intraday support and resistance points.  This technique has been around for decades, yet is still much in use today.  Before the advent of computers and sophisticated analysis techniques, floor traders used a set of calculations to determine key support and resistance points in the market.  They calculated these points from the previous days open, high, low and close.  The floor traders today still use these points in their intraday trading. Since the floor traders in the pits are using these points for support and resistance, it just makes good sense to keep track of these key points and be aware of them if you are doing any type of intraday trading.

For any market, there is an equilibrium point around which trading activity occurs.  In the absence of large numbers of new buyers or sellers, this point serves as the pivot or focal point for the floor traders (locals) and the market makers as they adjust their bids and offers.  When prices move away from the pivot, there are zones of support and resistance that can be derived from the established value area in that particular market. Penetration of these zones leads to perceived changes in valuation and usually results in the entry of new players and orders into the market.  

Trading for the day will usually remain between the first support and resistance points as the floor traders make their markets.  If either of these first points are penetrated, off-floor traders are attracted to the market.  The range of trading has now expanded and if a second support or resistance point is broken, then even longer-term traders will be attracted into the market.

Knowledge of the levels at which different types of traders are likely to enter the market can assist in determining when a shift in valuation by the locals has occurred.  This is especially useful when there is little outside influence on the market and the local floor traders dominate trading.  As long as no significant market news has occurred between yesterday’s close and today’s opening, the local floor traders and market makers tend to move the market between the pivot point (P) and the first band of support (S1) and resistance (R1).  If these first levels are broken, look for the market to test the level of support (S2) or resistance (R2) and then (S3) and (R3).

Combining Pivot Points with other indicators such as overbought/oversold indicators is easy and helpful. Several examples are: if price moves up to the first resistance level (R1) and one or more of your other indicators have moved into overbought territory, the confirmation provided can create a higher confidence sell signal.  However, if price reaches the first resistance level (R1) and the other indicators are in a bullish mode, you could make a higher confidence buy decision with an upside target of the second resistance level (R2).  It is also possible to combine the Alchemy Floor Traders Pivot Points with the Alchemy Support and Resistance Pivot Point indicator to give you additional support and resistance points. 

Knowing where the floor traders levels of support and resistance are located can give you a good framework for what is going on in the pits and should help you in your intraday buy and sell decisions.