People believe that using the system of pivot points in Forex Trading is an obsolete method or that it is useless. In reality that is not the case, it is the most widely utilized method in financial markets to this day. This method has been employed by professional traders long before the computer age.
In the past people used to manually plot graphs and then calculate the pivot points, now it has become much easier because of the computers and the internet as many pivot point calculators are available on line today.
The Forex trading market is quite volatile and it can either go up, down or propagate sideways. So there is no other dimension to it. All you need is the data of the previous day to generate pivot points. You need to know at which value the market opened, at which value it closed, the value for the previous day’s high, and the value for the previous day’s low and then plot these values in a formula available on the web and you get pivot points, now all you need to do is run a comparison and compute where are the pivot points and they will help you determine when to enter and when to exit.
Pivot point’s method of reading the Forex trading market and determining your options is a goal driven method as it comprises of mathematics there is very little room for you to go wrong, accept for those situations in which some news badly affects the market, otherwise yields through the pivot point method are not to be taken in abstract.
Entry and exit points prescribed by Pivot Points tend to be your exact entry and exit points. This is how you use the pivot points in determining your entry and exit points. If the market pauses and stalls at a given pivot point, and if at that instance you see that the asset’s price is overvalued or in a state of “overbought” then that is the time to sell and exit. If at that time the asset price has fallen below its actual price then that is the time to enter. If you want to double check before entry and exit then you can compare the pivot point levels with Fibonacci levels and if both levels coincide then that means there is very little doubt and you should make your move.
