Forex trading secrets – The pivot point

You may have heard that one of the best tools in the Forex trading toolbox is a pivot calculator. Pivot points are one of the more commonly used triggers for trading systems. If you’re new to the Forex market, though, you may be unsure of what pivot points are and what they can mean to your trading.

To keep it simple, pivot points are just what it sounds like, the exact point that the market is expected to turn negative or positive. If the market or a specific currency has been going down, the pivot point is the precise moment or "point" that it will reverse itself and begin to climb. If a currency or the market as a whole has been on the rise, the pivot is the exact moment and "point" that it will reverse and turn downward.

Having the knowledge or predicting significant movements in the Forex exchange markets is a coveted talent, it can make people extremely wealthy. The pivot point and being able to correctly identify it is one of the closest ways to claim this attribute.

As it uses technical analysis, it is not a certainty that the points will be on the mark all the time – but the trend of the Forex trading market is to follow a technical pattern of rules. Trading on pivot is a highly popular method and is the fundamental part of numerous successful trading strategies. It is a strategy mired in pedigree, originating on the floor of the New York Stock Exchange by traders looking to get an edge up on the market by using a few minute calculations off of sparse, but key data.

If you know the low and high as well as the previous day’s opening and closing prices you can get the pivot point, and if you know that exact moment, you can more accurately predict the immediate trend. You do need to know more about support and resistance levels – but in time you too can master the mathematical science of predicting the Forex market.

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One Response to this post

  1. deval on September 20, 2009 at 11:17 PM

    article is useful