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What is pivot point? Pivot point is a point on a graphic pf a price that can show you the further direction of the movement of a currency pair’s price. If a price is higher than pivot points, then you can predict that the price would move up, so if the price is lower than pivot points then the price would move down.

We have determined about the meaning of pivot points. Now we have a reasonable question — how to find this pivot point? There are a lot of ways to find pivot points. This says that a method of finding pivot points can not be named as a perfect method. After you have determined a pivot point, you can find levels of support and resistance. I.e. you can determine approximate aims where a price may move. This is very well already.

Let’s start with a standard calculation of a pivot point. This calculation has become classic almost.

The classic calculation of a pivot point

PP=(H+L+C)/3

Where

PP — a pivot point
H — the highest level of a price at the previous day
L — the lowest level of a price at the previous day
C — the closing price at the previous day

As you can see there is nothing complex in the calculation of pivot points.

Proceeding from the definition, you can create conditions for entering the market. If a price is higher than pivot points then you may suppose that there will be a rising trend, and if a price is lower than pivot points then there will be a falling trend. Is that so simple? Actually yes. But in certain conditions this principle of trade can bring you to losses. And if you are not lucky very much, then you will have double losses. Why does that happen? Actually the answer is simple. Pivot points can be used with trends only.

But you may ask a question: “if there is no a trend on day candles, then it can be on smaller time-frames?” You are completely right. Yes, the trend will definitely be on smaller time-frames and you have to use that. Pivot points will be like a distinctive boundary that will be giving signals about the ending of one mini trend and the beginning of other mini trend. But you have to realize that in the given case transactions will be not large. You also can use pivot points as stop loss. But all that is relative and trade in the passage is joined with great risks than the trade with trend. As always you make a decision. With the help of pivot points you can find the levels of support and resistance.

There are two options you can earn on Forex.

You can study the basics of Forex market trading with the help of a nice forex book and do the forex trading yourself.

OR you can hire experienced traders to manage your account and they will trade for you. Read more about forex investment.