Pivot Points: What Are They And How Do I Use Them?

Pivot points are used frequently in all types of trading

. Forex is no different. Most new traders have never heard of pivot points and don't have a good understanding of what they are. Simply put, pivot points are significant price levels that are used to find support or resistance for price movements. As such, they're very valuable tools and are popular among all traders

With most trading, daily pivot points are calculated. These points are then used for traders to gauge where areas of support and resistance may be found. With forex, it is somewhat more complicated. The forex market doesn't have an official opening and close. Instead, there are three sessions; the New York, Asian, and European sessions. Traders use various opening and closing times to calculate forex pivots and it depends on which currency pair you are trading. Some forex traders don't use daily pivots and instead look at weekly and monthly pivots. These traders are more interested in large moves than short term trading.

Every trader should always be aware of where pivots are, even if they don't intend to use them. The reason is that so many traders do use them and, because of this, there is usually interesting price action around these areas. Fortunately, most chart packages provided by brokers calculate pivots automatically for you. You just need to look at your software. Pivot points alone can't provide entry signals. However, they can be used in combination with other technical indicators to make more profitable trading decisions.

Pivot Points: What Are They And How Do I Use Them?

By: Alex Post

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