pivot points

[thomasryan]

i am new to trading and am learning about pivot points, i understand how to compute a pivot point and locate the resistence and support levels but am unsure on how to use them properly. foe example. if i compute the pivot point for say eur/usd on an hourly chart for say 12:00 at night do i use that pivot point against the opening price at 12:01 or rather am i basing my pivot point around that time. and can i use that pivot point stragedy randomly say at 5:00, 3:00 ect. and what time frame is best to calculate a pivot point the daily, hourly,15 minute ect. can someone help me with this problem.

[MoneyTec]

I wanted to point you to our pivot points Calculator http://www.moneytec.com/forums/_foru...id-107?menu=60

[JR97]

It doesn't really matter what 24 hr period you use. What does matter is that you watch how price reacts around pivot points and look for entry/exit signals around those pivots. It also helps to trade during the most active times to catch when price is most active between the pivots.

[mishak]

Pivot points are all about highs and lows. I believe one should pick the time period for highs and lows not randomly, but having in mind some human cycle (because humans are those who trade).
Therefore 24H period is perfect - a human day. 8H and 4H makes sense as it is the lenght of a shift (or half shif from morning till lunch).
Any shorter period than 1 hour does not make sense for me.

Another idea is to consider European open time as the beginning of the forex day. Because main events happen in Europe and USA, so Japanese are usually the last who react to some news/event.

Take care and have fun

[L.C.]

Pivot points are often discussed but not always understood.
I think that the first problem is that sometimes people will expect too much out of an article describing a trading method. When I first started reading on how pivot points worked I tried to apply what I read exactly as the author described.
First problem with doing that is every time a trading opportunity sets up… it will always be a little different. The structure has to be there but it will always look a little different.
I think the best way to learn a new method is to learn the basic structure of the method and then watch how it works in a live market.
So please remember that if you are thinking about applying what I write in this text.
I must mention that I find my entry and exits on a 30 minute chart. The pivot points I use are based on the daily high, low and close of the previous day and I apply them to my 30 minute chart.
I don’t really look at the pivot points until after I am in a trade. I am always aware of where they are, but I don’t expect much of them if they are in the middle of no where. What I mean by that is the pivot points seem to have the greatest affect when they line up with a psychological level or support or resistance and or Fibonacci levels.
I have a very specific set of rules for my entry but the focus here is how I use them for profit targets.
I traded the GBP/USD the other day. The S1 pivot point happened to line up around the extension target of a price swing I was trading. This also corresponded with the psychological level of 80. So with all these things lining up together, I used that price level as my profit target. Then I leave it alone when the move is over. I don’t chase the price for a little more of the move. Doing that usually results in giving back some of your profit.
Another thing I would like to mention is that when price has been in consolidation, you will usually see the pivot points in a very narrow range. If I find a trade during this time, I will usually ignore the pivot points because they are too close to help me and I will trade to a psychological level as a profit target.
So I think that the best way to use pivot points is to try and incorporate them in your current trading method and use them as profit targets. And remember, the price will not always hit the pivot point on the number. It will still work… just use the pivot point as a general area to keep an eye on.
L.C.
udaytrading.com
This article courtesy of http://www.udaytrading.com/
You may freely reprint this article on your website or in
your newsletter provided this courtesy notice and the author
name and URL remain intact.