Online Currency Trade

The Pivot Point At Trading

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Traders making use of pivot points as strategy for trading has always been present; this was originally utilized by the so-called "floor traders". Pivot points were a very simple way for the floor traders to have an idea as to where the market was aiming during the trend of the day, with very simple calculations.

The level of the pivot point is where the market course changes each day. With the use of simple mathematic calculations, and the past day's close, high and low, the series of pivot points are traced. These pivot points can be crucial support, with resistance levels. The level of the pivot, resistance levels, and support, are calculated, and used accordingly.

Everyday you are following a market that has a high, low, open, and close for each day. Some of the markets, like Forex, are open 24 hours, but in general use is 5 pm EST as the opening and closing time. This information is basically what is needed to calculate, and utilize pivot points.

The main reason for calculating pivot points is that they are prognostic. You make use of the previous day's information to calculate an expected pivot point for that day, as you prepare to do some trading for that specific day.

Since there are so many traders that follow pivot points the trader will often find the reaction of the market with these levels. This gives the trader the chance to trade.

If the trader would rather work with the pivot points by themselves they should use some practical formula.

The main idea behind trading from pivot points is to spot a break or reversal of the R1 or the S1. And by the time that the market achieves the R2 and R3, or the S2 and S3, the market will be over-bought, and the level should be utilized for exits, other than for entries.

The perfect set is for the market to open just above the pivot point level and then stand somewhat at the R1, then go on to the R2, and then target the R3.

Unluckily, life is not simple as this; we have to deal with trading each day as best as we can. We have to aim to increase our income and minimize our losses. Pivot points can help to achieve this.