Pivot Points by stelmax

For pivot levels, we use different definitions of the pivot point. In fact, there are three different methods to calculate the reference level using this method.

For these pivot points, we set the variable x, the value of which depends on whether the open is higher or lower than the close.

If the close is less than the open, x = H + 2L + C.
If the close is higher than the open, x = 2H + L + C.
When open equals close, x = H + L + 2C
This final value will be one of the most commonly used designs. This is because, as FX is a 24 hour market, the open is almost always equal to the close.

If you look at the daily chart throughout the week, the close and the open are really just names. This is in contrast to the stock market, where the open and close are very different things, separated by time and price.

Once we have the pivot point and the x-value, we use it to compute the pivot point of the base P.

P = x / 4

Support and resistance levels are also calculated from x (pivot points do not use more than one support and resistance level).

S₁ = x / 2 - H
S₂ = x / 2 - L

Thus, we have seen how to calculate different types of Pivot Points indicator. But how can we now use them in our trade?

First, we can use our anchor point to define the general direction. - If the existing market price is above the key PP level, it suggests a bullish trend.

- If the market is below the key PP level, it suggests a bearish trend.

Pivot levels are set according to the value of the previous trading day.

+ If the price is below the PP pivot level - priority is given to sell deals, if higher - to purchases
+ Confirmatory signals can be candlestick patterns and the Stochastic indicator
+ The SL level can be set either for a signal candle or for the nearest level
+ Target - movement to the nearest support / resistance level

Keep in mind that the Pivot Level Indicator is not a complete trading system!

Remember that there are no indicators in trading that do not make mistakes, Pivot Points, like any others, require confirmation of their signals. When building your own trading system, use several indicators.

Observe Money Management. Never risk more than 2 percent of your capital in one trade. This approach will protect you from ruin and will allow you to consistently make money on Forex using the Pivot Point.

Be clear about your trading strategy. If, according to the pivot point strategy, you need to open a deal - open, if you fix the result - fix it, and it doesn't matter if you are in the black or not. Only following the rules of Pivot Points "from and to" will allow you to earn.