# Chapter 15, Part I. Pivot points – description and calculation. Page 4

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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1. ### Sive Morten Special Consultant to the FPA

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Let’s check this method:

Here is EUR/USD Monthly chart with such 1x1 DMA on (H+L+C)/3. You can see in the left bottom corner the value of this DMA for the current month – 1.4575.

Now let’s add monthly pivot – take a look at chart #3:

Chart #2 | EUR/USD Monthly chart such 1x1 DMA on (H+L+C)/3

Chart #3 EUR/USD Monthly chart with 1x1 DMA on (H+L+C)/3 and Pivot point tool

See this short blue line – this is monthly PP and it shows the same level – 1.4575. So, it works.
Pipruit: Commander, why is Open price is not used in Pivots calculation?​
Commander in Pips: Well, today we’ve discussed the most common approach, so called classical calculation of Pivot points, but there are some others that exist and the open price is used sometime. We will discuss it a bit later.

But I’m adherent of the classical approach, because open price as a rule is very near to the close price of the prior trading session, and it looks like that instead of using prices just of last trading session, we add the price of the prior trading session. This distorts the value of Pivot points. Open price in fact, has no time to include all sentiment and price action of last trading session. That’s why the using of Open price looks unnecessary to me.

Still, as we’ve talked million of times here – if you’ll find that calculating of Pivot points with the open price included looks useful for you – then you should use it.

P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer soon.

Note: FPA ranks are earned in the battles against scam, not in the classroom.

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