Education
3 Pivot Point Forex Trading Strategies
1- What is a Pivot Point?
What is a pivot point in Forex? Pivot points assist traders
with determining price movements in financial markets.
Put simply, a pivot point is a price level that is used by
professional traders to assess whether prices are bullish or
bearish. Pivot points represent the averages for the highs,
the lows, and the closing prices that occur within a trading
session or a trading day. Pivot Points are a type of
indicator used for technical analysis, which provides the
basis for determining market trends.
2- Support & Resistance Levels in Pivot Point Trading
Underpinning nearly all forms of technical analysis are the
core concepts of support and resistance. These can be
thought of as levels that are expected to be key
battlegrounds in the battle between bears and bulls. As the
market approaches them, some traders expect the price to
rebound.
Others might anticipate the chance of a breakout.
Consequently, they are important prices because they
signpost the chance of significant movement. Therefore,
identifying where these levels lie is a very useful skill to
develop.
Given the importance of support and resistance points, there
follows a natural question: How do we calculate where to
find these crucial price levels? There are a large number of
methods that attempt to satisfy this query.
One popular technique used is looking at pivot points. Pivot
point trading takes standard price information, such as
highs, lows and closes, and uses this information to project
possible support and resistance levels.
Free Live Trading Webinars with Admirals
If you're interested in learning more about the best trading
indicators, the most popular strategies, the latest news,
trends and developments in the markets and more, there's no
better way to do it than with the Admirals FREE regular
trading webinars.
Receive step-by-step guides on how to use the best
strategies and indicators, and receive expert opinions on
the latest developments in the live markets. Click the
banner below to register for FREE trading webinars!
3- Forex Trader: An Introduction
A trader is someone who places orders on the financial
market. This could be on behalf of financial institutions,
such as big banks, investment funds and hedge funds, or as
an independent trader.
Exchange orders, such as buying or selling stocks, are
either in the trader's own name, or on behalf of clients or
for the financial institution or broker that employs them.
There can be further categorisation, depending on the assets
being traded: Forex, equities, bonds, commodities, etc.
Traders who work for financial institutions or brokers buy
and sell shares on behalf of their employer's clients, not
with their own money. This means that rather than making a
profit or a loss on their actual trading, they earn a salary
as a trader. In this case, the trader takes virtually no
risk in the market - it is on their customer buying or
selling financial instruments to cover the risk. The
trader's clients may be anything from individuals to
companies that do not have a trading room of their own.
Those who trade on their own personal account are using
their own money to attempt to earn profit for themselves.
These accounts are funded with their personal funds and
trades are executed through online trading platforms. Even
though online brokers offer leverage, the amounts traded by
home traders are much smaller than those of a professional
trader. Since online trading is often done on the OTC (Over
the Counter) market, the success of traders in their own
accounts are only estimates.