A Simple Way to Trading in the Forex Market

Pivot Points Forex Strategy are used by Forex Investors today. They are calculated on a day before the move, and Forex investors enter the market when it hits a resistance or support line of the Pivot Point, giving that the OB/ OS indicator is in agreement. You’ll have to put the resist and support lines in place first thing in the morning. After, you’ll wait for the market to hit the expected entry Points.

Against all what some Forex traders believe, Forex trading with pivot points is one of the most popular Forex Trading method currently used in trading the exchange market today. Long before the creation of computers, this method was used by investors in the pits to determine hidden resistance and support levels.

Experienced FX traders and technical analysts still use the pivot point. The major advantage we now have is that we now have computers that can quickly calculate your points ahead of time. A lot of charting packages can now calculate them for you automatically, thus making your use of pivot points very easy.

Although there is much more information about the Trading With Pivot Points in Forex Trading, the goal of this article is to introduce you to the concept of Foreign Exchange Trading with pivot points.

Remember that the market can only go down, up, or sideways. No matter the direction the market follows, it would still return to a balance position. The market is more or less like an elastic band: it goes sideway, up, and down, but it would, at the end of the day, find its way to the initial balance position. So, the role of Pivot Points is to guide you in determining the extent of the elastic stretch before it returns to its equilibrium position.

Although many time frames can be used to calculate the Pivot Points, for the purpose of this article, we will concentrate on the daily schedule (i.e., 24 hours). Pivot Points are determined using the previous days, low, high, and close figures. We now have a lot of Pivot calculators on the internet, so you don’t have to do the calculations manually.Also, note that the longer the periodyou’re using, the longer is the time you’ll have to wait for the next entry point or stay in the market.

Unlike many other indicators, Pivot Points are an objective tool. Because the Points are calculated mathematically, you can be certain that there can be only a specific answer for a particularperiod.

Many subjective indicators like Elliot Waves, Fibonacci retracements (and I’m a huge fan of Fibonacci), etc. can have different Forex Traders trading in entirely different directions at the same time because of their different interpretations.

The Pivot Point can assist you predict the following day’s highs and low ahead of time. PPs can provide you with anything from four to eight levels of support and resistance. But you still have to be able to recognize the trend before you can be a successful Pivot Point trader. PPs also work efficiently in a trendy market.

Pivot points can give you the exact exit and entry points, rather than enter a market that is about to turn against you. And at this point, other indicators usually come handy in assisting you to determine the exit and entry points. If the market hangs at a PP level, and you have an oversold or overbought signal that it’s a good time to exit or get in. Or if your Pivot Point level coincides with the Fibonacci level, it can be a strong indication that you can exit or enter the Forex Market. If the FX market is bullish, and your favorite signal is not close to overbought when it met the first resistance level, then you likely have a good point to remain in the Forex market and make your profit goal the next PP resistance line. The breakout over the first resistance level can now be your stop reverse or new stop.

Obviously, the opposite is also true of the support level. By combining your favorite indicator with the pivot points, you can invent your Forex trading strategy that no other person uses.

The trading for the day will likely remain between the resistance (R1) and the top levels of support (S1) as the floor FX traders make their markets. The moment one of these levels is breached, other Foreign Exchange Traders would be attracted to the market, and should the other level (the second level) be penetrated, the long-term Forex investors are immediately attracted to the market.

Knowing where floor traders expect support or resistance may be a major advantage, especially when there is no external influence in the market. Provided no relevant market news has been broadcasted between the close of yesterday and the opening of today. The market makers and local floor traders tend to move the Forex market between the first support line (S1) and the Pivot Point (P) and the resistance (R1). If any of these levels is penetrated, then expect the FX market to text the next levels (R2) and (R3) or (S2) and (S3).

Although there are many other aspects of trading Pivot Points, why not try this simple method and see if you can come up with your own unique, working strategy, using your current Forex trading together with the pivot points.