How many times have you heard traders talk about Pivot Points? Maybe you have been afraid for asking what it is, and how to calculate them. Pivot Points are quite amazing and very easy to calculate. You could say that if you had a road of 100 meters. The central pivot point would be at 50 meters mark. So the central Pivot Point is actually a measured median of a distance. You would have 50 meters in both direction from the central Pivot Point. Same things apply to the financial markets. Assume you measure the move from one point to the other last 24 hours. And instead of calling it meters we call it PIPS. PIPS is how we measure the moves in the financial markets. So let say that the Forex Exchange pair as EUR / USD moves 150 PIPS last 24 hours. We would set our central Pivot Point close to 50% of it's distance or at 75 PIPS from top or bottom, it doesn't matter. This 50% mark we call Central Pivot Point. As that is from where we will measure all other levels of Support and Resistance. Maybe you have been using Fibonacci retracements and extensions. Then you know you measure highs and lows with each other. While Pivot Points measure a specific time interval. The most common way is to take The Highest and The Lowest and The Close Price of New York midnight. And to calculate The central Pivot point you simple add the three HLC data together and divide by 3. Like this (H+L+C)/3. That is how you calculate the central pivot point. Try it tomorrow and see what happens around central pivot point, you'll be just amazed. Sincerely, Daniel Gustavsson
http://www.yourfx.com |
