A floor-trader's calculation that served as the centre of gravity for the day. A reflexive tool that works because everyone sees the same levels.
Pivot points originated in the pre-electronic era, when traders worked on the floor of the exchange and computed support and resistance levels by hand before the session began. From the previous day's high, low, and close, they derived a daily "centre" and several supports and resistances above and below it.
Even in the electronic age, pivots remain widely used in intraday trading — particularly in equities, futures, and FX day-trading. The reason is simple: everyone using the same formula sees the same levels. Like VWAP, pivots are a reflexive tool.
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