FXCM & Pivot Points

[LiamH]

OK, so I've been back and forth between trading and poker over the last 6 months - After losing a couple of thousand a few years back trying to trade (badly) I'm not going near the market with my own hard earned cash again until I know that my head is in the right place and I fully understand what it is I'm going to do and why.

I opened an FXCM demo account the other day and am looking at the charts today... I notice that Pivot points can be added. I look at the hourly TF, the pivots are calculated on the daily but at each pivot the market did react.

Now, what I want to know is, where do the pivot points come from? How are they calculated and are they simply used as supp\res levels that you don't have to manually draw in?

I realise these might be stupid questions but I've heard pivot points mentioned before and assumed they were somehow better and more accurate than simple sup\res hand drawn on a chart although I never why or where they came from...

 

[pboyles]

OK, so I've been back and forth between trading and poker over the last 6 months - After losing a couple of thousand a few years back trying to trade (badly) I'm not going near the market with my own hard earned cash again until I know that my head is in the right place and I fully understand what it is I'm going to do and why.

I opened an FXCM demo account the other day and am looking at the charts today... I notice that Pivot points can be added. I look at the hourly TF, the pivots are calculated on the daily but at each pivot the market did react.

Now, what I want to know is, where do the pivot points come from? How are they calculated and are they simply used as supp\res levels that you don't have to manually draw in?

I realise these might be stupid questions but I've heard pivot points mentioned before and assumed they were somehow better and more accurate than simple sup\res hand drawn on a chart although I never why or where they came from...

The pivot point is the sum of the previous high, low and close price divided by three (H+L+C)/3.

R1, S1 etc are also just derivatives of the previous price using a different formula. They work because a lot of people use them, there is no magic in it. Personally I think its better to use weekly pivot points.

You can read more at mypivots.com

 

[LiamH]

The pivot point is the sum of the previous high, low and close price divided by three (H+L+C)/3.

R1, S1 etc are also just derivatives of the previous price using a different formula. They work because a lot of people use them, there is no magic in it. Personally I think its better to use weekly pivot points.

You can read more at mypivots.com

Thanks, that's cleared it up nicely. I'll take a look at that website as well.