A Pivot Point is nothing more than a level or point where market direction changes. Once calculated, Pivot Points can yield some important support and resistance levels to work off of. So think of Pivot Points as markers on a map or markers on a chart. In the case of FOREX Trading, they can be viewed as points of interest that you can use to trade from or as potential future trading opportunities.
Pivot Point Calculation
Pivot Point = (Daily High + Daily Close + Daily Low) / 3
Support 1 = 2 * Pivot Point - Daily High
Resistance 1 = 2 * Pivot Point - Daily Low
Support 2 = Pivot Point - (Resistance 1 - Support 1)
Resistance 2 = Pivot Point + (Resistance 1 - Support 1)
Pivot Point Trading Strategy
One of the easiest trading strategies is simply to see what the day may look like right at the open. If the market opens above your calculated Pivot Point, you will want to buy. On the flip side if the market opens below the Pivot Point, you will want to sell. You will remain a buyer / seller as long as the market stays above / below the Pivot Point. This is the most basic level of Pivot Point trading.
There are more strategies and methods involving trading with Pivot Point and can be easily found when you do a search on the internet.
No comments:
Post a Comment