April 28, 2012

What Is Pivot Price In Forex Trading?

I believe you have heard about pivot point in Forex trading, so what is Pivot Price then?

Pivot pint is a technical tool using the High, Low and Close of the previous day trading to calculate a set of resistance and support levels.

Most traders only use this trading tool to ‘forecast’ the direction of the market or creating the ‘bias’, by using the opening price of the market. If the price trades above pivot, the bias is up; if the price trades below pivot, the bias is down.

Price action is about making trading decision using plain charts; as very often traders’ psychology are being reflected on the chart itself, that include the results of an economic data, traders’ print the results clearly on the chart before the release of the data.

Just take a few minutes of your time to look at the chart (no indicators) on your trading platform, you can actually see how the prices will often stalled or create a strong break through at a certain levels.

If you now add your pivot point indicator to the chart, you will see a clearer picture on how price action coincides with the levels of pivot point. We are creating a ‘confluent’ trading based on the combination of both pivot point and price action, to increase the accuracy of ‘forecasting’ the movement in Forex market.

Using these combinations, we are able to eliminate the ‘guessing’ on where the market is going. This also helps traders who do not like to use economic data in their trading.

Above article is written and published in EzineArticles, article source: http://EzineArticles.com/5643945