Pivot points or pivot point are among the oldest and most efficient trading methods used. In fact, these are support/resistance levels that are calculated by formulas, and not visually observed in the graph. The objectivity of the pivot points makes them an undeniably strong tool for predicting reaction levels during trade. They rely on very simple but intuitive formulas.
The essence of
pivot point can be considered as the gravitational level, since it tends to attract a price to itself, that is, if prices are below the turning point, the trader can expect the price to rise, and vice versa. From the pivot point, we can calculate the estimated support and resistance levels for the day. The way they are traded is also simple. A price approaching the implied backstop may give us an opportunity to open a long position, while a price approaching the resistance level may give us an opportunity to open a short position. A mild reminder of that a long position on an asset means a purchase, and a short position means a sale of a security when you do not have it, so that you can make a profit by buying it back cheaper (if it falls). In other words, using today’s closing prices, highs and lows, we will be able to design the expected reaction levels tomorrow.
How to trade using pivot point
Open the chart – after you have calculated the day’s datum points, open the OHLC histogram and add the datum points to it. Wait and watch – keep a close eye on the market and wait until the price approaches the pivot point. If this is a long deal, price bars should touch new lows as they approach the pivot point. If the deal is short, ensure that price bars do not touch new highs as they approach the pivot point. Let the price touch the pivot point – after that you have to stay waiting until the price touches the pivot point, which basically means, that in this case the share is traded at a reference price. Enter the deal – you should start trading when you find that the maximum of the first price bar that could not touch the new low has been broken.
Fast, simple and predictable. Three characteristics that characterize the pivot points. Of course, you can experiment with other reference points to see the difference, and they all work perfectly. Further research can be done to find the best type of flip points for different asset classes. Pivot point record: what is this and how to trade first appeared forex-for-you.ru.