Standard Pivot Points are calculated using the previous day's high, low, and close prices. The calculation is based on a simple formula and it results in a central pivot point (P), and two levels of support (S1 and S2) and resistance (R1 and R2) on either side of the pivot point. The pivot point itself acts as a potential level of support or resistance, depending on whether the market is trending up or down.

Here's an example of how to calculate standard pivot points:

Example:

• Yesterday's high = $100
• Yesterday's low = $90
• Yesterday's close = $95
• Pivot point (P) = (H + L + C) / 3
• Pivot point (P) = (100 + 90 + 95) / 3 = $95
• First level of resistance (R1) = (2 x P) - L
• R1 = (2 x 95) - 90 = $190
• First level of support (S1) = (2 x P) - H
• S1 = (2 x 95) - 100 = $90
• Second level of resistance (R2) = P + (H - L)
• R2 = 95 + (100 - 90) = $185
• Second level of support (S2) = P - (H - L)
• S2 = 95 - (100 - 90) = $85

Traders can use these pivot points as a basis for their trading decisions, buying when prices hit a support level or selling when they hit a resistance level. It's important to note that pivot points are not a guarantee of future performance, and that prices may not necessarily conform to the calculated levels, particularly in volatile markets. Traders should use other indicators and market analysis in conjunction with pivot points to make more informed trading decisions.