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Chapter 15, Part II. How to use Pivot points. - Q&A

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, Sep 13, 2011.

  1. Administrator

    Administrator Just Administrator :-)

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    Please use this thread for questions, answers, and comments on this lesson.
     
  2. extremerrage

    extremerrage Recruit

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    very nice explanation :D
     
  3. Robert Andrighetti

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    which is correct?

    Hi Sive,

    There are so many pivot points out there it seems everyone is different. The ones you say are way different from other sites that I check out. How do I know which ones are correct? Or if you can recommend any software that is good that would be great.

    Thanks
    Rob
     
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Rob,
    I use most well-known "classical" pivot points calculation. But in the next part you may read about other ways of pivot calculations that also used in practice...
    I find for myself classical pivots as absolutely suitable. Still you may experiment with different types of pivots. I also provide the formulas for their calculation.
     
  5. Bangla Forex Rider

    Bangla Forex Rider Private, 1st Class

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    hello sive
    You said "Professionals rarely trade breakouts as the public does. If they expect some breakout - they prefer to have a position prior the breakout itself or open one on some retracement following the breakout to be a very wise rule – “Buy deeps and Sell rallies”.
    Can you please explain those lines . i like to know what pro like you think before enter in a trade
     
  6. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Bangla,
    unfortunately it is very difficult to explain with two words. Definitely speaking, I also trade breakouts, but I need some confidence that it will be definitely breakout.
    How public trade breakout - usually for public breakout is any move beyond the previous extreme. But such approach has a trap - currently market very often shows failure breakouts (may be oftener than true breakouts) by some reasons. If you have read Fibonacci chapter - there is an explanation, when some Fib extension target stands slightly beyond previous extreme. Hence, market will show failure breakout, but public will eat it and will fall in trap.
    this is just one of possible examples. So, to accept breakout you have to be sure that there are high odds of true breakout.
    Or, as opposite way, you have to open position prior breakout by some context. We previously have discussed it in details in previous chapters.
     
  7. Urum

    Urum Private

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    Hello Sive

    Thank you for this explanation. It's great and I really see it working often. And because of this I would like to know more about pivot points so I just wanted to ask you for any good educational materials that you recommend, for pivot points.

    Thanks
     
  8. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Urum,
    Unfortunately, I do not know additional books dedicated particular to Pivot points. Here I've written practical application of them, as I use pivots. Probably you can try to find something by yourself, but I do not know the book on pivots that I could recommend.
    If you will find something valuable - let us know.
     
  9. Aucke

    Aucke Recruit

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    Hi Sive,

    I don't quite get point 11 above ("You may understand why does the market take a directional move or retracement move by applying pivot points. If the market does not touch weekly pivot supports 1 in an up move on daily chart or pivot resistance 1 in a down move and weekly pivot point holds market – then the market isin a directional move. If the market reaches support 1 during up move or resistance 1 in a down move – hence, market falls into retracement.") - could you please explain what you mean there?

    Thanks,
    Aucke.
     
  10. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Aucke,
    if you will take a look at any daily chart of trended market and draw weekly pivot points, you'll see that very often pivot holds the price. I mean price just touches pivot - and continue move with trend. But, if on upward trend price moves below pivot - next destination is pivot support 1 (from pivots tool framework). It is treated that trend still intact, until pivot support 1 holds price. breakout of pivot support1 will be early sign of trend break.
    Other words - if market falls into retracement on uptrend, very often pivot support 1 holds it. The same is true for downward trend, but on pivot resistance 1.

    The total sense of these point is: pivots could help you to understand when retracement has started and whether trend still holds or not.
    If market moves below pivot on long-term uptrend - then you can say that retracement has started. It will be still retracement until price holds above pivot support 1. Once it has been broken - this could be the sign of trend breakout and reversal.
     

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