Pivot point trading is an highly effective Forex trading approach which can be adopted by traders and incorporated into their trading strategy. Pivot points were first used by floor traders as a way that the could calculate the anticipated daily direction of the markets. Learning about Forex pivot point trading can be an effective trading tool you can use every day to help you make more profitable trades.
The use of pivots as a trading strategy has been around for a long time and was originally used by floor traders in the futures market. This meant that by just a few simple calculation, traders on the floor could determine the most likely directions of markets during the course of the day.
Pivot point trading is based around the use of the Pivot point and a series of pivot levels. These are set levels in the market where it is viewed that the market may slow up or retrace.
Pivot points are mathematically calculated. The high, low and close prices of a currency pair are used to work out a series of pivot trading levels for your Forex trading. These pivot point levels can then be overlayed on the current market price.You can calculate pivot points for different timeframes easily by inputting the high, low and close prices into a Pivot point calculator.
Most Forex traders use seven pivot levels when trading this approach. Above the current market price three levels are given which are seen as resistance levels to price action. Three levels are provided below the pivot point and are viewed as support levels. The final level is the actual pivot point itself. This is regarded as the most important level. If the market opens above this level for the day the market is considered to be showing bullish tendencies. If the market opens below this level then traders will consider it to be bearish for the day.
Pivot point trading is particularly popular strategy employed by Forex traders. This is because pivot levels are considered to be leading rather than lagging indicators. Pivot points provide an indication of where the market may head in the session. This is unlike many technical indicators which only provide information on where the market has been rather than where it is likely to head.
Due to the number of Forex traders who follow pivot points, it is common for markets to react as expected by these levels.
Pivot trading is particularly flexible and can be used in a wide range of trading approaches. For example pivot levels are often used to trade ranging and breakout strategies as they can be used to identify both breakout and reversal levels. They are also suited to short term traders who will look to register short term profits in the market.
As with all technical approaches pivot point trading is not infallible. However pivot points are another trading tool that you can use to help weigh the odds in your favor.
Source: Forexarticlecollection.com
The use of pivots as a trading strategy has been around for a long time and was originally used by floor traders in the futures market. This meant that by just a few simple calculation, traders on the floor could determine the most likely directions of markets during the course of the day.
Pivot point trading is based around the use of the Pivot point and a series of pivot levels. These are set levels in the market where it is viewed that the market may slow up or retrace.
Pivot points are mathematically calculated. The high, low and close prices of a currency pair are used to work out a series of pivot trading levels for your Forex trading. These pivot point levels can then be overlayed on the current market price.You can calculate pivot points for different timeframes easily by inputting the high, low and close prices into a Pivot point calculator.
Most Forex traders use seven pivot levels when trading this approach. Above the current market price three levels are given which are seen as resistance levels to price action. Three levels are provided below the pivot point and are viewed as support levels. The final level is the actual pivot point itself. This is regarded as the most important level. If the market opens above this level for the day the market is considered to be showing bullish tendencies. If the market opens below this level then traders will consider it to be bearish for the day.
Pivot point trading is particularly popular strategy employed by Forex traders. This is because pivot levels are considered to be leading rather than lagging indicators. Pivot points provide an indication of where the market may head in the session. This is unlike many technical indicators which only provide information on where the market has been rather than where it is likely to head.
Due to the number of Forex traders who follow pivot points, it is common for markets to react as expected by these levels.
Pivot trading is particularly flexible and can be used in a wide range of trading approaches. For example pivot levels are often used to trade ranging and breakout strategies as they can be used to identify both breakout and reversal levels. They are also suited to short term traders who will look to register short term profits in the market.
As with all technical approaches pivot point trading is not infallible. However pivot points are another trading tool that you can use to help weigh the odds in your favor.
Source: Forexarticlecollection.com
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