Traders use pivot points to determine where potential support and resistance levels are. Pivot points are interesting to use, because they are relatively simple to implement, but also because of their objectivity.
Using Pivot Points with Logic
Using pivot points is especially useful for short-term traders who are looking for small price movements. When a price approaches, you can choose to to trade the bounce or break of these levels. Pivot points work really well in very volatile and liquid markets, so they are ideal for trading forex. You can use them to determine the levels of potential entry, stops and take profit.
Why Using Pivot Points works
The main reason why they work is that most retail trades, institutional traders, investors and banks use and trust pivot points. Pivot points can be used as an important measure of strength or weakness in a currency pair. Pivots can also be extremely useful trading ranges or channels since many currency pairs usually fluctuate between these levels.
Do pivot points work all the time? The answer here is no. Just like any other tool, strategy or indicator, you need to use additional tools and gain knowledge of trading the market.
Final Words
Because of the their sheer simplicity, pivot points definitely are a useful tool to add to your trading toolbox. It allows you to see possible areas that are likely to cause a price reaction. You’ll become more in sync to market movements and make better trading decisions. And as mentioned before in this article, using pivot point analysis alone is not enough. Educate yourself in other trading tools to, to reach the maximum of your capacities.
Watch the video above for the full lesson so you can continue to enhance your skills and be better everyday.
#UrbanForex - Be conscious of your trading!
Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice. Urbanforex will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.<7p>
Editors’ Picks
EUR/USD drops below 1.0800 after German Retail Sales data
EUR/USD has come under fresh selling pressure and trades below 1.0800 after the data from Germany showed that Retail Sales declined by 1.9% MoM in February. Resurgent US Dollar demand is adding to the downside in the pair. US data are next in focus.
GBP/USD stays weak near 1.2600 amid market caution
GBP/USD remains defensive near 1.2600 in European trading on Thursday. The hawkish tone from Fed Governor Christopher Waller keeps the US Dollar afloat amid a cautious trading environment ahead of key US data releases and the Good Friday trading lull.
Gold price bulls keenly await US PCE Price Index on Friday before placing fresh bets
Gold price (XAU/USD) continues with its struggle to make it through the $2,200 mark on Thursday and oscillates in a narrow trading band through the early part of the European session.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
The other terminal rate: How far will policy rates be cut?
Recent communication by the Federal Reserve and the ECB has made it clear that the first cut in official interest rates is coming. Both central banks are saying the same but the ECB communication is more opaque than that of the Fed.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
Discover how to make money in forex is easy if you know how the bankers trade!
5 Forex News Events You Need To Know
In the fast moving world of currency markets, it is extremely important for new traders to know the list of important forex news...
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and...
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.