Trading Forex using Pivots

mik1973

Well-known member
Been reading up on Pivot Points and was wondering if anyone has had any success applying this technique to the Forex.
Cheers
Mick
 

Newtron Bomb

Experienced member
mik1973

you have to remember that all indicators work some of the time. What is important is how YOU apply them and cope with the psychology of trading as a business. This is one of the more important aspects, in my opinion, that nearly everyone overlooks.

For me i have always been drawn to chart patterns si i read a lot about them and learned how to apply them and also how they may relate to other math indicators... etc. etc.

Find something that you feel drawn to indicator wise, like pivots, and explore the possibilities and get to know and understand then so you can use them successfully.

HTH
Newtron Bomb
 

mik1973

Well-known member
Thx for reply Phil. I've been reading so much that i'm suffering from paralysis by analysis- still learning- researching and looking for those "few" nuggets of information/indicators that i'll be happy trading with.
Mick
 

Faris

Active member
Time Frames

Morning traders.

Could anyone tell how to work out what time period i should use for pivot lines?
I know the high, low and close are used to work out the SR lines but dont know if i should use the close of london, U.S session etc.

Also would it matter what time frame i used? 5min, 15min etc

Thanks
Faris...
 

Faris

Active member
Thanks for the link Dan. Thats an interesting site.
Think the guy who owns the products posts on moneytec.
Anyway im even more lost than before.

Iv tried loads of different ways of working out the pivots.
Since im trading the european and U.S sessions, would have thought that i would use the high and low of the euro/ U.S session and use the close of uk time( midnight).
Would that be correct??

Faris..
 

zigglewigler

Well-known member
Faris
Pivots are daily calculations, whatever time frame you are in is irrelevant, the daily pivot will be the same. You can use h+l+c/3 or h+l+c+today's Open/4. The pivot points are very important for SP floor traders, they work them out first thing including second resistance and support.

Pivot=(h=l=c)/3
R1=(Px2)-l
S1=(Px2)-h
R2=P+(R1-S1)
S2=P-(R1-S1)
or
R2=P+(h-l)
S2=P-(h-l)

I only bother with main pivot and watch indices' reaction to it, it is like a light to moths. You can best study its effect on a 60 min chart.

Quick pivot calculations:
http://www.stelaronline.com/resource/pivot.htm
 

Faris

Active member
Thanks for the reply zigglewigler.

I understand where your comin from, i just assumed that when trading the Forex market the pivots would be different as the market is 24 hours and you've got different time zones.

Thanks again
Faris..
 

zigglewigler

Well-known member
Faris
I don't do FX, but can testify to the importance of pivots on the main indexes. What would worry me about pivot calculations for FX is that being 24hrs you have dealers world wide in all time zones putting in their pennies worth, so there isn't really 'y'day's action', this would throw off the usefulness of pivots. Also if currencies dealers as whole don't use them, then they would probably be redundant.

This has got me scratching my head! Would be interesting to hear from anyone that knows better about FX.:confused:
 

eminem

Active member
I think you're right Faris, the daily pivot will change depending on the "close" figure used? Perhaps the best option will be to use the close from UK/Eu, US and Far East and see which three sets of numbers fit the follwing days action best.
 

Faris

Active member
Thanks guys for your responses.

Iv just spoken to Newtron Bomb as he is very experienced in trading the Forex.
He seems to think that you should used the asian market as the open/close which makes sense (10 pm uk time), bit i think eminem could be correct also in checking all the time zones to see what fits best on the current days action.
That could end being confusing though!

Faris..
 

noises49

Member
re Pivots

Mik,

I calculate Pivots every day and can attest to their power. I use 2200 GMT as the end of the trading day and base my calcs on these numbers. My bias is to look for a Reversal off the pivot. I use 15 or 30 minute charts for same. Break-thrus can be very powerful - use pivot as stop in these cases. Todays trade on GBP/USD worked as well as it can. My pivot was calculated at 8251. Low of the day was 8249 @ 0100 GMT and displayed as a hard reversal on the 30. Gain so far is about 150 Pts for a good days work. While this is excellent action it is by no means unusual. Might be a good idea to set a pivot watch on the board.
 

noises49

Member
Pivots - 2nd Post

Mik,

I forgot to mention the Support and Resistance levels that come along with the calculations. My experience is they are useless - and I ignore them accordingly.
 

mik1973

Well-known member
Thanks for your post noises. You've raised a couple of points which i'd appreciate clarification on. You mention in your second post that the support and resistance levels which come along with the calculations are useless. I thought that all pivots were viewed as S/R. I am new to this so please excuse my ignorance.
I was going to ask about the 8251/8249 figures -wasn't sure what they referred to at first but i guess these are the quotes after the decimal point right?
Told you i'm new at this !
Would appreciayte if you could explain your interpretation of pivots and how they differ from S/R
Cheers
Mick
 

neil

Legendary member
zigglewigler said:
Faris
Pivots are daily calculations, whatever time frame you are in is irrelevant, the daily pivot will be the same. You can use h+l+c/3 or h+l+c+today's Open/4. The pivot points are very important for SP floor traders, they work them out first thing including second resistance and support.

Pivot=(h=l=c)/3
R1=(Px2)-l
S1=(Px2)-h
R2=P+(R1-S1)
S2=P-(R1-S1)
or
R2=P+(h-l)
S2=P-(h-l)

I only bother with main pivot and watch indices' reaction to it, it is like a light to moths. You can best study its effect on a 60 min chart.

Quick pivot calculations:
http://www.stelaronline.com/resource/pivot.htm

Look at Ziggies calculator - it shows the PIVOT line and the supp/res. either side of the pivot. Try some examples.

Hope this helps :D
 

noises49

Member
Pivots again

Mik,

Neil's post shows the calculation. The pivot is a "stop or pop" price level, while the support and resistance prices are levels above or below the pivot that are supposed to provide reversal points. As I mentioned, my experience has been that they rarely do; so I ignore them. My process is set an alert at the pivot - at 2200 GMT, and hope that it goes off. If and when it does you have to make the stop or pop decision - reversal or breakthrough. Today was a no-brainer; some days are more difficult; some days it never gets hit, i.e., price moves away from the pivot from the get-go. This can be dealt with by using the "four point" strategy - which we can discuss later.
 

mik1973

Well-known member
Thanks again noises.
Just to clarify, are you looking for a trading bar to penetrate the pivot point before you make a decision to go short or long. If for example the bar went throgh the pivot in a southerly direction would you go short for the day (and vice versa)? How would you deal with stops?
Is the Pivot line the only line you deal with- and that you would ignore all of the others?
If my understanding is correct you may have long periods of time before the pivot line is penetrated- however if this is a profitable strategy then it is probably worth waiting for.
I am genuinely interested in this topic and feel that it could prove beneficial- i just need to get a better understanding of Pivots.
Thx in advance,
Mick
 

noises49

Member
Mik,

You're right on. Trading the pivot is both an art and a science. My bias is reversal off the pivot as opposed to break-through. This is most relevant when the market is trending, as it is now, i.e., strong uptrend GBP/USD. So the pivot provides a nice point where profit-taking gives way to a continuation of the trend. Exactly what happened today! Stops are problematic. Use the pivot as a stop!? Also, my software has a trailing stop indicator that is starting to look good. It held up well today. Yes, you could employ a strategy where you trade only if the pivot is hit (which it is on a regular basis). The risk is missing huge moves away from the pivot - this is where the "4 - Pt" strategy comes into play.
 

mik1973

Well-known member
Noises,
The 4 pointer- sounds interesting- the whole pivots issue does- it's just applying it all at the appropriate time .
Would appreciate if you could go into more detail about the 4 point strategy.
Thanks again,
Mick
 

noises49

Member
4 Pts

High - Low - Close - Pivot

So I want to catch strong moves away from the pivot - when the pivot doesn't get hit. So we're in a strong uptrend on GBPUSD making yesterday's high a point of special interest. We got the best of both world's today, an enrty off the pivot reversal and another entry at yesterday's high. If the pivot is not hit, then buy the take-out of yesterday's high. It will be interesting to see what happens at 1.85 based on the 1.80 - 1.85 range that we've seen.
 
 
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