Trading Forex With Pivot Points Like An Interbank Mentoring Program Training Guru

Perhaps you have been trading forex with pivot points like an interbank training student for a while and already learned this strategy from a mentor. But, this article will cover pivot point trading with a different twist for using them.

If you're unfamiliar with this indicator you need to know exactly how a pivot point is calculated. Examine a bar chart and you’ll notice each bar has an open, high, low and close. This represents all price action during that specific time frame.

Suppose we use a daily bar chart for an example. To calculate a pivot point, all you simply need to do is add the high, low and close. Now that you have a total just divide the total by three. Assuming you had the following:

High 1.9270

Low 1.2550

Close 1.7410

you would add those numbers together for a total 4.9230 and divide the total by 3 to get a pivot point of 1.6410.

Now, here's what you do with this information. One technique is to use the pivot point as a trend indicator in intraday trading. You already know the pivot point for today is 1.6410 so you will use this data tomorrow as a trend indicator for day trading forex.

If price action takes you above 1.6410 then you're long or it takes you below 1.6410 then you're short.

Since price tends to fluctuate around any given point let's add a further stipulation. Let's say you have support close to 1.6410, then you want to wait for the price to pass through 1.6410 and support before entering short.

If you get resistance close to 1.6410 wait for the price to move through the pivot point as well as resistance before entering long.

This method becomes even more powerful when the point is near the opening price. Say for example the opening price is 1.7410, the pivot point is 1.6410, and you eventually go short at 1.5500. You can stay short all day as long price does not go above the 1.6410 pivot point.

Once in a position you will normally have a very tight stop for starters and then follow the market with a trailing stop to lock in profits.

You may also want to use pivot point indicators in your analysis for longer term projections. You can use them on a yearly, monthly and weekly chart. In this case you would use the high, low and close of the previous year, month and week.

You can consider weekly pivot points as the short-term trend, monthly as the medium term trend and yearly as the long-term trend. You will find this especially useful for spot forex.

Say you're below the yearly, monthly and weekly pivot point, you know it's a strong down trend so you can scale into multiple positions over time. The same holds true for long positions.

The crux of the matter is there are many ways to identify a trend. You can also use this forex trading strategy to find potential support and resistance.

As always with any new technique, paper trade and back test to determine if trading with pivot points like an interbank forex mentoring program training guru suits your personal trading style