Trading System With Pivot Point

Although often discussed, or you often find a technique using the Pivot Point Trading, no one if we rewrite trading techniques using this system. Pivot point is a technique developed by stockbrokers on the trading floor, which can help us see where the location of a price level relative to the situation and market dynamics that happen before. 

In accordance with the sense of the word, the pivot point means a point or extent to which a price movement will reverse direction. In forex, pivot point is the level where the market sentiment changed from 'bullish' (rose) to be 'bearish' (down), or vice versa. Pivot point is like a support or resistance, the price is moving closer to this point will be met with resistance and will reverse direction. But if the price broke through and move past this point, the movement will continue until it reaches the point berikutnya.bPivot pivot point and resistance levels as well as his support was calculated using the opening prices, the highest, lowest, and closing of the trading session before. Because the forex market is active continuously for 24 hours, traders use the benchmark New York market close (21:00 GMT) as a benchmark time of closing of currency exchange.

Pivot points are calculated by the following formula:

Pivot Point = (High + Low + Close) / 3

While support and resistance levels are calculated as follows:

The first support (S1) = (2 * PP) - High

The first resistance (R1) = (2 * PP) - Low

The second support (S2) = PP - (High - Low)

The second resistance (R2) = PP + High - Low)

In general, you do not have to bother counting, the software chart provided by the broker usually has the facility to calculate the pivot point. There are many software even provide not only the fifth point, but further support and resistance levels to add it to the third (S3 and R3). It added that the points are not significant as the five main points, but not one that is also included for completeness.

Trading With Pivot Point

Pivot point is the area should receive attention when analyzing the market because it is the pivot point support or resistance level of the most significant. many experienced traders wait at this level for a transaction. When the price of moving closer to the pivot point many traders began to enter the market to take positions, buy or sell, and set a profit target (take profit) and limit the loss (stop loss). In general, if the price is above the pivot, then the market is considered bullish (up). Conversely, if the price is below the pivot, the market is said to be bearish (down).

If prices held below the pivot point (PP) and closed at that level, it is a good enough reason to take a position; sell 'with stop-loss at some point in the PP and profit targets in S1.

But if prices continue to move down and through the S1, from the closing of transactions you can move the 'stop-loss' some point in the S1 and put the next target profit in S2. S2 is normally the lowest level of daily currency movements and close the transaction at this level is someone who steps bijaksana.Hal the opposite occurs when the price is above the pivot point and closed at that level. You can take long positions with stop-loss below the pivot point and the target profit at some point down R1. But if prices rose by a strong and penetrating R1, stop-loss could be raised and placed under the target profit of R1 while it shifts to the R2 level.

Strength of support and resistance levels at various pivot is determined by how many times the price reaches a level and then turn around arah.Semakin often the price reaches that level and then reverse the stronger the pivot level.

If the price moves up close to the movement of resistance, you can observe when the price will turn off. When the price goes down you can take a position with a stop-loss selling in the resistance. But sometimes the ride is pretty strong motion and resistance can be pierced so that you hit the stop-loss. This is a risk in forex. But if you believe the movement is so strong, you can take long positions when prices break through resistance. In this condition the resistance turned into support so that you could put a stop-loss under the new support level (ie the earlier the resistance). This way your losses can be covered in the initial transaction gains you achieved on the second transaction. A similar thing can you do if the price goes down near support. When prices began to reverse direction and move up you can make a deal to buy with stop loss below the support line.

Indeed Trading Conditions

Pivot points are often successful because there are many traders who also believe in this theory and establish a pivot point at approximately the same level. So that when prices move closer to this level there are many traders who take a similar reaction, so prices tend to turn arah.Tapi however there are many cases where the pivot point does not work at all. This usually occurs when there is data or fundamental news that makes the prices tend to move with a strong trend and many traders ignore all forms of resistance and support.

Therefore, whatever the circumstances there is no better strategy than this: follow the trend in the market. So if normal market conditions and prices move in terms of support and resistance, do the transaction by following the pattern. Likewise, if there is a strong trend and the price moves in one direction, forget about support and resistance, just follow the trend.

Best Trading System Forex

The formulation :

Psychological backgrounds that exist in this approach is quite simple. If for some reason the price does not work beyond a certain level in the previous session, then the level is likely to be taken into consideration in calculating the trader support and resistance. There are likely large enough to penetrate those levels and prices reversed course. Determination of pivot point levels in this way can be applied to the conditions and prices trending flat (sideways). Below are some tips that can help you to make decisions based on market mapping by using the pivot point

If the price is in PP, look at the possibility of movement towards R1 or S1.

If the price was R1, consider the possibility of price reverses direction to the PP or the movement continues to R2.

If the price is in S1, consider the possibility of price reverses direction to the PP or the price movement continues to S2.

If the price is in R2, consider the possibility of prices moving back to the R1 or R3 continues to.

If the price is in S2, consider the possibility of prices moving back to S1 or S3 continues to.

If there is no news or fundamental factors are significant, the price usually moves from the PP to a S1 or R2 and turned again.

If there is news or fundamental factors are significant, the price usually tends to penetrate the R1 to R2, or R3 even if the trend goes up. And the price tends to trend down through the levels of S1 to S2, or S3.

In normal conditions S3 and R3 is the maximum price movement possible in a single trading session. This level is only breached in the event of extreme conditions in the currency market.