Benefits of Pivot Point in Forex Trading

[sichone]

This is one of my experience in my daily trading activity, and I am very glad to share this article for readers. I hope that this article will inspire you in your trading activity and then help you to make money online by forex trading. I am especially share about the benefit of using pivot point analysis.

Pivot Point is a price level that is between support and resistance levels and is one method of technical analysis is used to identify areas where the price movement will be amended. Many analysts use pivot point formulation in forex to find the level of support and resistance levels and then use it to place an order (Buy / Sell). So before determining support and resistance levels, you should already know the price of the pivot point.

Level of pivot point is resulted from the sum of the price position in the period of the previous day, which consisted of the opening price (Open) where are consist of highest price (High), lowest price (Low), and closing price (Close) and then divided by the number of the price positions, that is 4 (Open, High, Low, Close). The easiest way to know the positions of the price of the previous day period are: open your chart, or press F2 on the keyboard of your computer, then click on the currency you trade, and then click Daily periods (D1).

Example:
picture above shows that the EURUSD position in the period 05.08.2015 00:00 Open is the price: 1.1267, High: 1.1289, Low: 1.1178, Close: 1.1210. How to calculate the pivot points, support and resistance are:

Pivot Point: (Open + High + Low + Close) / 4 = (1.1267 + 1.1289 + 1.1178 + 1.1210) / 4 = 1.1236
Resistance 1: (2 x pivot point) - Low = (2 x 1.1236) - 1.1178 = 1.1294
Resistance 2: pivot point + (High - Low) = 1.1236 - (1.1289 - 1.1178) = 1.1347
Support 1 (2 x pivot point) - High = (2 x 1.1236) - 1.1289 = 1.1183
Support 2: pivot point - (High - Low) = 1.1236 - (1.1289 - 1.1178) = 1.1125

Another formula to calculate the pivot point is (High + Low + Close) / 3

Overall benefits of the pivot point in Forex trading are that you do not lose your way in determining the target point and entry point. The key point in determining the target point or entry point is the support and resistance lines. Resistance is conditioned as a boundary line or the psychology of price movements that are rising (bullish), and the support was conditioned as a boundary line or the psychology of price movements that are down (bearish).
While the pivot point is typically used to determine the direction of future prices. If the open price is above the pivot point, it is predicted prices will move higher (bullish), if the open price is below the pivot points, the predicted price will move down (bearish).

From the descriptions above, of course, you already know how to use pivot point. However, the pivot point just as a way to predict the boundaries of price movement and not as a way to make sure where prices will move. To better understand the pivot points, support and resistance, I recommend that you practice directly through your chart.

Razor Tips

The basic concept for applying trading is the main objective which is not always want to win every time, but rather on maximizing profits "- (Jeff Yass).
Trading is not difficult, what is difficult is Discipline and commitment are required in trading activity (Michael Miligan).

Hopefully this article useful to you

[Jillur Rahman]

Thank you very much for your useful post, Pivot Point is very important issue for technical analysis based trader! Pivot Point is very important technical point of market. Most of the time, market select its trend status in order to position of Pivot Points. That’s way, if get a big rejection from any PP then I always try to follow this trend! I think, Pivot Point is one kind of Support/Resistant point!

[Noin1976]

There are major advantages when trading with support and resistance lines, and they should be a staple in every trader's arsenal. Another effective method of deriving multiple, horizontal based support and resistance lines uses a formula derived from yesterday's high, low and close bar. The formula maps out pivot point levels consisting of the pivot, and three levels of support and resistance, and these levels can be traded much the same way as trading from the regular support and resistance levels and trendlines, using a mix of breakout and bounce trading strategies.

http://www.alpeshpatel.com/

[shalom]

Pivot Point strategy is indeed a good trading strategy. Have you tried the Momentum indicator? That is another good Forex strategy. I found this article on it; https://nogold.com/how-to-use-momentum-indicator-forex/

The Momentum indicator can be calculated with two formulas:
Momentum = Price Closed Today – Price Closed N Days Ago
Momentum = (Price Closed Today / Price Closed N Last Day) * 100

[Sameeh]

Pivot points can give good indications for support and resistance levels and so the trader can use it during analysis of the chart as it will help him to find the strong levels of support and resistance, though i was using it in the past and stopped trading with it now but i see it is good helpful for any trader and also the trader can determine the take profit and stop loss positions according to the levels of the pivot points and so he can improve his trading and increase the successful trades and decrease the lost trades, it is better to use an indicator of pivot points that does not repaint as this will make a difference for the trader and let him to read the chart better and so he can trade better and avoid making of mistakes.

[Katrina]

A forex pivot point is considered to be an indicator which would be developed by floor traders in the commodities markets to determine potential turning points, also known as pivots. Forex pivot points woudl be calculated for determining the levels in which the sentiment of the market woiuld be changing from bullish to bearish.

[FXOpen Trader]

A forex pivot point is considered to be an indicator which would be developed by floor traders in the commodities markets to determine potential turning points, also known as pivots. Forex pivot points woudl be calculated for determining the levels in which the sentiment of the market woiuld be changing from bullish to bearish.

We can make use of the Pivot Points in doing our trades but we will need to understand that our timings need to be corrected.

[FXOpen Trader]

A forex pivot point is considered to be an indicator which would be developed by floor traders in the commodities markets to determine potential turning points, also known as pivots. Forex pivot points woudl be calculated for determining the levels in which the sentiment of the market woiuld be changing from bullish to bearish.

Some of the traders are able to use the Pivot points in a better way.

[Mila]

Pivot points are a popular tool used in forex trading due to their numerous benefits. Firstly, pivot points provide key levels of support and resistance, allowing traders to identify potential price reversals and market trends. These levels serve as reference points for entry and exit decisions, aiding in setting profit targets and stop-loss orders. Pivot points also help traders gauge market sentiment and make informed trading decisions based on price action around these levels. Additionally, pivot points are widely followed by institutional traders, adding to their significance and effectiveness. Overall, pivot points offer a straightforward and practical way to analyze price movements, improve trade timing, and enhance risk management strategies in forex trading.

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