«
»
31

Oct

Pivot Point Trading In Forex Trading

Posted by admin as forex

Pivot points are some of the exciting trigger points for traders to enter positions in forex market as well as equity trading, although this is more or less extensively used in forex market. Calculating the pivot points is pretty simple and makes the trading day an eventful one if you got your calculations right.

So what is a pivot point? Quite expectedly the pivot point is one at which the market changes its direction for the day.

How to Calculate Pivot Points?
Use the simple formula for calculation:
Pivot point for the day = High (previous) + Low (previous) + Close (previous)
3
In short pivot point for the current day equals the average of high, low and close values for the previous day. Once having calculated the pivot point, you need to find out derivatives like three supports and resistance levels each for the current day. Here are the formulae to use for the purpose.
R3 = High + 2*(Pivot – Low)
R2 = Pivot + (R1 – S1)
R1 = 2 * Pivot – Low
S1 = 2 * Pivot – High
S2 = Pivot – (R1 – S1)
S3 = Low – 2*(High – Pivot)

So you have 7 points all put together; 3 resistances and 3 supports and one pivot point. Most of the action is going to be around S1, R1 and pivot points for the day. This is because by the time market could reach R2, R3 or S2, S3 it will already be over bought or sold.

Going forward, it would be invitation for going short if the market opens below the pivot and long if it is other way round. However, real world strategies differ hugely from this ideal situation.

Trading Strategies Using Pivot Points
There are several strategies for the vivid day trader who can use the pivot point. Some of them are rather simplistic while others are advanced where one needs to consult additional indicators such as MACD.

Basically, at every support levels and resistance levels, if the rend reverses you have the chance to enter long positions or short positions and put stop-losses at the preceding low or highs respectively. Some times the market pulls back from a support which is a signal for short entry. This trend continues for quite some time if, at that point the MACD is in a selling mode.

It is prudent for the trader to refer back to MACD at critical stages before entering into positions.

5 Comments »
cecilgamini says October 31st, 2008 at 1:33 am

What are pivot points in forex trading?
Please give a reference to an explanatory article. Thank you.

no nickname says October 31st, 2008 at 6:35 am

Piece of advice…stay away from forex trading. Why ?
Because it is a scam and all they want is your money.
They make it sound easy but it is not easy. Do your homework.
References :

stock.geek says October 31st, 2008 at 6:37 am

Hi, i suggest a great site with plenty of Issues related to your Investing and everything around it. it also provide clear and accurate answer to many common questions.

I am sure that you can get your answers in this website.

http://investing.sitesled.com/

Good Luck and Best Wishes!
References :
http://investing.sitesled.com/

uman614 says October 31st, 2008 at 6:39 am

Hello,

I completely agree with wanting to invest your money. Afterall, what's the point of making money if you can't make more money with your money (got that?)? Anyway, I've tried all different investments from stocks and bonds to IRA's, 401k's, and real estate. I'm really a big fan of diversification.

However, the only investment I've really been happy with so far is real estate. Over the past 5 years, I've bought 3 different properties (all have tenants, and I'm making more than the mortgage payments on 2 properties).

The 3rd property I got was using Carleton Sheets no money down methodology (he's a GURU in real estate, and yes, his methods do work!). You can actually buy a property for absolutely nothing down (NO MONEY FROM YOUR OWN POCKET). I payed over $500 for his course 3 years ago, and I just saw it online for $9.95!!!! This is a steal at $9.95 (I'm actually going to buy it for my friends for Christmas). It was featured on TV, so I got the website from there.

Before you invest in anything, I highly suggest the Carleton sheets course. http://www.alllsite.info/real-estate.php
References :

4XTrader says October 31st, 2008 at 6:41 am

First of all, "no nickname" is clueless. He probably had 1 bad experience in FX trading and considers it a scam. It's like going out on 1 bad date and now dating is a scam? Please. Second, Uman needs to read the news. With real estate declining (and quickly by several comments from people that have worked in the industry for decades) I'm sure he's going to get burned soon. Flippers and r.e. investors are starting to lose money. With house values declining and new home builders offering incentives to sell their homes, r.e. investors are getting taken to the cleaners.

Alas, none of them answered your question. A pivot point is not exclusive to the FX markets. You can use pivot points in stocks, futures, etc. A pivot point is a calculation based on the high, low & close price of the previous day. A pivot point is a "possible" point where prices could turn. Or if prices exceed that point, then it could act as potential support/resistence (depending on which way the market is moving). If prices fall below the pivot, then it could now act as resistence. If prices rise above the pivot, then it could now act as support.
References :
I trade fx & derivatives.

Leave a Comment:

Name (required)
Mail (will not be published) (required)
Website
Message
CommentLuv Enabled

This site uses KeywordLuv. Enter YourName@YourKeywords in the Name field to take advantage.

Valid &