Trading Forex using Pivots

Thanks for the mentoring Noise!
Got a few more questions if you don't mind:

How do you calculate 'todays' pivots- is this based on the full range of previous day's open -high-low-close- or do you constantly review and recalculate depending on today's price action.

How do you enter a opening trade if the opening price is nowhere near the pivot point -example - if the price opened well above the pivot would you be inclined to sell- as if the price was currently overbought or would you follow the 'trend' and look to take a long position?(and vive versa)
Mick
 
Hi Mik,

1 - Calculations are based on previous day's Hi/Low/Close. I've got a SS to do this, but several websites provide if you prefer.
My calcs are usually very close to Daily FX @ http://www.dailyfx.com/, plus they have lots of good analysis.

2 - How do you trade it? My preference is to place an alert or entry limit buy/sell at the pivot (bias is for a reversal at pivot - interpret "pivot " literally, i.e. turn-around) and an alert or entry stop buy/sell at the high or low - as appropriate. A break thru the pivot in a trending market represents a 'trend killer," so trade accordingly. (Lots of stops on the opposite side of the pivot account for large moves on a break). A breakthrough the high/low represents trend continuation, as today's trading showed. If you chose to set alerts, give them a chance to play out. How long? 30 minutes or so? Check fundamentals if you can to confirm the move. For example, I would expect significant news to back a pivot breakthrough.

In the end, it's another tool in the arsenal - it certainly looks like a very good one! Let me know what your thoughts are.
 
Interesting approach noises.
Think my main concern is if the price opened high in the range- i might be inclined to sell- (maybe that's the fear factor kicking in - thinking that it 'can't ' go any higher).
I like the idea of using the pivot as a kind of rebound area- so if it doesn't penetrate the pivot you place your trade in the direction it was going before this line was hit.

Can i ask how effective this has been for you- have you done much back testing and how often do the signals usually flag if you're using a 30 min chart?
Thx again,
Mick
 
What time to take start and end of day

Noises

Do you use FXCM and if so what time do you use for start and end of day to calculate pivots?

PS Any others feel free to add their comments too.

Thanks
 
Think that was mentioned on the previous page of the thread. Seems you could take up to three "closes" - Asia session, UK/EU session and NY session, take yer pick. Guess it depends on which session you plan to trade, I did suggest in an earlier post to calculate them using all three as you can bet most pro traders will be aware of the pivot calculated using 3 different time zones.
 
Forgive my ignorance as i new to the FX side of things (currently trade CFD's) but where can i get the session time information for each location and i was under the impression i should use the start close from the broker/data provider for the charts i use?

From what you say it would seem i have been misled
 
Mick,

That's basically the idea. Today's pivot was 1.8390. Today's low was 1.8380. Got a 200 Pt run off this reversal. Price action around the pivot was messier than yesterday, i.e, he hung around for awhile. So what? I'm willing to take a few small head-fake losses in return for a 200 pt move any day. The art of this trade is to determine when he commits, but that's no different than any other methodology.
I can tell you for sure this method is highly effective. Just check out the last five days. It's most effective in a trending market - no surprise - but it's also aces on calling trend reversals.

Awoodj,

I use VT from CMS. I use 2200GMT for my calculations. That's when "interests" are updated around the globe. Their is no better time to use!
 
Thanks for the input

I was thinking about CMS, how do you find them, i was a bit concerned as to their financial backing eg cash in the bank as from what i understand if they dissapear so does your money. Apart from that i like their platform (GTF Forex also looks quite good)
 
Hi again noises,
Do you mind if i ask what stops you implement on positions?
As i'm working full time (unable to watch my positions on monitor) i have ended up using quite wide stops. I suppose i'm a position trader on currencies (which can result in very wide swings in either direction)- however if i can trade in the early evening then i take that opportunity.
What kind of trader do you consider yourself to be and what would you consider to be appropriate stop loss levels?
Cheers,
Mick
 
This is what concerned me about CMS

From their web site

That does not sound like a lot of money if they have a few problems with the odd customer making a large amount of money at their expense. I guess i might still use them just minimise the deposit size and use more leverage, that way i can put more in if and when i need to.



"CMS, LLC is proud to report that since January 1, 2003, the company has more than tripled its assets to over $11.5 million dollars. In addition, during the same period, CMS, LLC has increased its net capital account to over $3.5 million dollars.

CMS currently has about 6,000 clients and its monthly turnover exceeds $20bln USD."
 
Awoodj,

http://www.cms-forex.com/

Takes about 5 minutes to download and establish a demo account. Let me know what you think.

Mick,

Stops are either our best friend or worst nightmare. In general I believe wider is better (if you can afford it). My stops are normally based on chart configuration rather than a set amount.
Also, CMS has built in trading systems, one of which is a "trailing stop algorithm" that will either alert you or trade for you. So far it looks very promising. With the standard set of params the stops look to be about 60 pips to start - all params adjustable by the user. It should definitely help in establishing a "position" if that's what you're about.
My trading preference is to establish a position - and ride it if I can. (Easier said then done). So much more relaxing to trade with "house" money than my own. Also, if I get in early I try to not only hold my position but to "press" it. (Again, easier in hind-sight than on the hard right edge!). That 200 pt move off the pivot today could last for months if you kept buying on the way up.

Regards
 
CMS demo

I have had the demo account for a week or two and like it and i am at the point of wanting to fund and account and hence i am more worried about the security of the money once i do that.

The trading platform looks good and also promising for the future with a fairly good community BB etc to help out with ideas questions etc.

PS I think someone told me there was a bug in the trailing stop indicator (which might be fixed by now) so test before you use it for real.
 
Pivot Breakthrough - Apr 2

Hi Faris,

Some thoughts on today's action. Pivot 1.8520. Stopped out twice attempting to short this puppy but got my revenge on the Jobs report. It was apparent what the deal was before it went down. Strong break of the pivot early on, only to see a migration back up to it. (So yes, the pivot becomes a decent stop in my opinion.) Reversals are normally quick and strong, i.e. a "spike" on the chart - not the case today. Also I pay attention to what MA is doing. She broke thru about 90 min after price and began floating under the pivot while price was playing games. A sign of things to come. At jobs report time I was confident of a crash and set my orders accordingly. :D

Regards to all
 
I went short on the Euro yesterday- (and put on a wide stop, based on resistance at around 1.2450 )- my first week of FX trading has resulted in a profit of 320 pips since Tuesday.
Only basing decisions on S/R but hope to implement a pivot strategy over time.
Mick
 
Well done mik

I put on a short in the evening at 1.2349 with a tightish stop (20 points). The high in th night was........ 1.2369. Stop hit exactly. In retospect I should have put it just above the recent highs rather than just below. Such is trading.
 
Thx JP
As i hold an account with Finspreads i am trading the June Future (hence the reason for my wide stop) as this company only allows telephone trading for the Spot rate. I don't have time to constantly monitor my positions or be on the phone for any length of time.

I'm trying to strike a balance between position trading (over a number of days) and placing my stop- any tips?

Cheers,
Mick
 
Stops are the fine art of trading mik :)

It comes down to the timescales you are trading and the trade plan. I try to identify recent hi/lo and sup/res.

I am of the opinion that stops should be placed where you would consider the trade to have failed eg. I try to consider if I would still enter the trade in the direction I am planning if the market was 20/30/40 etc points higher/lower. The point where you would not consider the current trade valid and that takes account of the price history and your timescales is the place to put the stop. This obviously varies with the instrument being traded and the volatility (historical and current).

For daytrading forex I will set a hard stop usually between 15 and 30 pips from the entry. Normally in the 20 to 25 range. This is my hard stop that will be taken if I have not stopped earlier and is also my safety net if the market does something unexpected. I never enter a forex trade without putting a stop in with the opening order.

I rarely trade longer term positions on forex and will leave any tips on this to those that do.

It is worth noting that once I have an idea of the stop level I am looking at I also have a good idea of the risk/reward of the trade. This is then another factor in my decision to enter the trade or not. If I consider the stop required to be too far away for the reward anticipated I will not place the trade.

So, no definitive answer I am afraid. What works one day will frustrate you the next.
 
Thanks for your response JP. It probably is one of the most difficult areas in the trading world when it comes to placing stops. If i was day trading i would certainly place far tighter stops. I guess i've been fortunate this week that i've managed to catch the big moves. I'm aware that these could have gone against me but it was the chance i was willing to take.
May as well stick my neck out here so people can have a laugh next week. I reckon that the Euro will trade between 1.2050- 1.240. I believe the market over reacted today and that there could be opportunities for the Euro to go back north.
If nothing else you may not profit from my 'tip' but can have a good laugh if the whole thing goes pear shaped!
Happy Trading
Mick
 
Hey compadres, just wanted to drop a note to say thank-you for the fantastic thread you have going here!!!
Also, I've been feeling more guilty lately for being such a 'lurker' since I'm pretty new around here, and want to be more interactive. (more guilt for sucking so much great info out of the community and not being able to contribute much yet).
I can say that I am a strong believer in the pivot point & 4-point strategy, but like someone mentioned - you have to know when to apply them based on distances, trending and market conditions.
I also am using the CMS - VT platform and considering opening an a live account, really appreciated your comments about their finances. I really like their software.
Cheers all!
 
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