Starting Out In Forex....

[pierre 10]

Hi all. I am new to this forum. I read about pivot points in this forum and would like to know if they can applied to the forex markets. Can pivot points be used on a longer time frame as well?

 

So far, I use a variety of indicator signals for my entry and exits. Any suggestions would be appreciated.

[earsha 10]

Pierre,

 

A "Pivot Point" is a Technical Analysis term. Exactly how it is arrived at, I'm not sure. Any of the sites that publish FOREX news and commentary should also publish the "Pivot Point" along with their Technical Analysis for each pair. Essentially the "Pivot Point" is the point that (according to technicals) the direction of the pair is expected to change (or pivot). There is also something called a "Daily Pivot Point".

 

My experience is that it is a good idea to be aware of technicals and fundamentals. But I would not trade based upon technical analysis and certainly not on any person's analysis other than my own. Also keep in mind that basically every level of support or resistance is a potential "Pivot Point". so for our purposes, we have already learned as much about "Pivot Points" that we need in order to trade successfully.

 

Earsha

[pierre 10]

Thank you earsha. I'm still trying to develop my own methods of analysis. I read alot of good posts in this forum emphasizing the importance of having a trading style. Perhaps I may look into pivots and test it out.

[forex_gump 10]

Where can I get detail instructions on how to read and apply pivot points.

[carter 10]

Where can I get detail instructions on how to read and apply pivot points.

 

Try doing a search here. There is a ton of material on pivot points including videos, formulas, etc...

[surfer 10]

Hi, i am new in this forum and my english is not the best. But i will give my best.

 

A good side for actual pivots:

 

mataf.net

[Anna-Maria 10]

Anything will work some of the time, and if Pivots float your boat, then ensure you're aware of their strengths as well as their limitations (as with every form of t/a).

 

I haven't particularly found them to be of any great benefit across the cash FX instruments.

 

I prefer to use the prev day's close (5pm EST) as the fulcrum for next day's activity & use 2 averages (35 & 50%) of the prev session high-low as my R1-2 & S1-2 levels.

 

An alternative to that would be observing the prev 2 days high-low markers as your S1-2 & R1-2 markers, especially when price has been mired within a choppy range on the mid-frames (1-4hr)

 

Just my view! As ever, do your own diligence & TEST your observations thoroughly!!

[carter 10]

Hi texxas,

 

How did you come up with 35%? 50% is common, also a fib ratio. Curious to know why 35%? Thanks

 

Carter

[Anna-Maria 10]

carter:

 

I keep a detailed spreadsheet of the main instrument(s) I predominantly trade. Those being Euro & Cable.

 

Basically, I record the daily Open-High-Low & percentage change bias on these babies, & categorize them into "normal" & excess range parameters.

 

Excluding the abnormal range extremes, both these pairs spend the majority of their lives clipping between those 2 aforementioned % barriers.

 

so, I calc the 35 & 50% long/short measure away from the prev day's close & use those 4 levels (2 resist & 2 support measures) as my next day's observation points.

 

If it's likely to be a Big day, one or either side of those s&r levels will get taken out during the early to mid London shift.

 

If range play's are the order of the day, those levels will generally dictate the flow.

 

if they happen to confluence a prev swing high-low or key Fib number, all the better - but I prefer to use actual price range behaviour rather than an arbitrary math calc, which Pivots are essentially derived from.

 

hope that helps explain.

[Soultrader 12]

Veryyy interesting texxas. The 35% and 50% points basically act as S1,S2,R1,R2 pivots. So you would play them as if a pivot based trader would trade pivots?

 

The way you categorize them makes perfect sense. I have studied methods kind of similar in which fib ratios are applied to the high/low of the session to predict the following days range (for futures.... not my method). Very interesting indeed....

[Anna-Maria 10]

Hi Soultrader

 

yeah, basically they're my initial support/resistance guides - with the NY close being the fulcrum. They work & react best when price is cosseted inside a range zone.

 

Their effectiveness is diluted a tad when price breaks out & prints consecutive "Big Day's" - which it often does on the majors when they go on a run. But then, each trading behavioural shift has to be traded with very differing tools anyhow! Soon as you get a heads up as to which phase we're entering, it's merely a case of swapping toolboxes

 

Fib ratio's are a common them for sure, & on that score I really like the 78.6% number!!

 

If you like your Fib barriers, keep an eye on that calc.....it's led to 2x2c pay-day's on Cable with relative ease the past six weeks (on the 60 & 240m frames).

 

the 78.6 can be even be played on the 5m (not usually a timeframe I'd use ANY speficic technical observations on) pretty consistantly.

 

I hasten to point out: these tools & their observations are taken from the FX instruments, how they pan out on other instrument classes is unbeknown to me as I rarely trade outside this arena.

[Soultrader 12]

Hello texxas,

 

Thank you for the input I currently do not trade currencies but have been interested for quite some time. I just recently started studying a bit about them ( I trade eminis mainly). In the index futures, the S3 and R3 pivots are often a favorite pivot for fades by professionals. This is because price tends to stay within these two pivots 80%+ of the time.

 

Im curious to see if there are pivots or fib ratios that are usually faded by the professionals. You mentioned the 78.6% being a key fib number in the FX instruments. Do you think prices tend to stay within certain fib extension ratios such as 161.8% above/below the previous days high/low?

 

Im personally not too crazy about fibs... more into market profile and pivots. But just a little curious to see how the FX markets work

[Anna-Maria 10]

I used to mark them religiously a few years back & used the 38 & 62% (on the 240m+ frames) as either paring or compound levels, according to the flow of the trend.

 

But since the influx of more & more retailers into the fray, specially during the past 3 or 4 yrs, the majors have changed their behaviour around the Big Fib levels. Well, certainly the way I traded them.

 

I don't really pay them too much mind, other than when they marry a hard s&r confluence zone. Like I said, the 78.6 is a favored observation if it happens to hit on a Round Number/prev swing point.

 

I focus on the mid-term momentum plays quite a bit these day's, utilizing the 240-5m combo. That Fib point often gets me in with decent r/r - or gets me out at a keen pare level.

 

I'll haul up a couple attachments to better explain the reasonings. It's merely something I've gotten used to consulting on the Euro/Cable....like most things, it can be eyeballed pretty easily once you hone certain elements down to a consistant play.

 

I don't tend to complicate matters when executing via the technicals. I leave all the mumbo jumbo systems baloney to the grail chasers!! Let them chase their tails all over the park - I'd rather clip the price bars as & when they show me a favored set-up

[Anna-Maria 10]

Here are the 2 attachments I referred to in prev post:

 

1st snag is a 240m run of the higher low back off the Daily ceiling kick @ c9050

 

2nd from the 60m run back from a second attempt to attack the months highs above 1.91 - the 78.6 forming a higher low at a pretty decent Big Number support.

[Anna-Maria 10]

Here's one such example currently playing out on the micro timeframe (5m).

 

I'll certainly be eyeballing this present scenario as Tokyo wakes up later. Price is bobbing along in a pretty crucial zone up here, & if the Cable Bulls are intent on keeping hold of the rope, they'll wanna contain this push to new yearly highs.

 

Plenty of space below to pick it back up should Friday's close continue a southbound tack, with 9050 & 8970 likely support camps to re-engage longs - see if the UK PPI can exert a little influence.

 

Just thought I'd sling this up, as it appeared on the radar anyway

[torero 10]

Excellent charts, tex.

 

I'm a newbie in forex so I have never made a big deal with different openings in London, Tokyo and New York. Wanted to get your insight on how they relate to each other in influencing prices. Do these openings counter-act each other as new opening begin?

[Soultrader 12]

Thank you for the charts Texxas. Alot clearer now

[Anna-Maria 10]

Wanted to get your insight on how they relate to each other in influencing prices. Do these openings counter-act each other as new opening begin?

 

Hey torero,

 

London is the big dog where volumes are concerned, & that translates across most of the high liquidity products.

 

Approx 60% of New York activity is transacted during the London morning shift & the overlap from Tokyo (thru till around 9.30am GMT) affects the early doors activity - hence a lot of talk around the bulletin boards re: Asian breakout trade entries?

 

The London-New York overlap is the main focus after late a.m London trade has settled down, & volumes then dry up noticeably as London shuts for the day.

 

Wellington/Sydney is of little relevance to the main European pairs, so I wouldn't waste your energy even observing that open tick activity.

 

Much of Tokyo trade (certainly on the Cable & Euro) is confined to position management via the tier 1 & 2 shops - you'll often notice volumes starting to uptick as Tokyo emerges from their lunch break (5.00am GMT), particularly if price has been edged back from prev session highs-lows in late NY trade.

 

Whenever price has printed a Big Day or broken out of a niggly range containment, I'll start to get interested in the following Tokyo shift - other than that, I'll merely monitor prices (if already positioned) & engage or pare off as London comes to the table.

[Anna-Maria 10]

Thank you for the charts Texxas. Alot clearer now

 

no problem!

[Anna-Maria 10]

....Like I said, the 78.6 is a favored observation if it happens to hit on a Round Number/prev swing point.

 

I focus on the mid-term momentum plays quite a bit these day's, utilizing the 240-5m combo. That Fib point often gets me in with decent r/r - or gets me out at a keen pare level.

 

 

Soultrader:

 

The 35/50% s&r levels played out again today!

 

Printed a neutral bar at the high of the Tokyo shift (50% resistance level), & cont'd down thru the Asian low as London came on board - triggering on the break of the Asian low (London Open) signalled good momentum today

 

the lower 2 support lines only briefly tested before bottoming out into the London close @ the Big Number/78.6% (from recent swing move)......

 

Briefly glancing at Raul's "Breeze" Strat, looks like he executes a similar simple, yet effective momentum based trigger.....I'll have a more in-depth read of it later!

[surfer 10]

Hi,

 

i am newbie in the forex jungle:) . At the moment I am only watching GBPUSD in different timeframes.

 

@texxas

 

Thanks for your information. The enclosed chart emphasize your 78,6% statement.

 

 

 

P.S. Excuse my english:o

[Anna-Maria 10]

@texxas

 

Thanks for your information. The enclosed chart emphasize your 78,6% statement.

 

you're welcome.

 

I'm sure it's been mentioned on here someplace, but in case not: before anyone goes hell for leather incorporating a singular or combination piece of someone else's analysis into their arsenal......TEST IT - & test it thoroughly!

 

consistancy (or success) is measured not by how many pips you pull out of the market over a short, sharp period of "hot activity" - but by finding a method which suits your psychological approach to your preferred instrument & adopting a simple, workable template.

 

nothing works all of the time. but adopting a consistant plan & adhering to the similar signals will tell you 'when it's working or not'

 

capital preservation should be No 1 priority - period....when the market isn't playing ball (according to your strats), get the hell out & stay out until it slips back into line (according to your rules).

 

never force your strat, never chase the markets & definitely don't start tinkering or changing anything just because you've gone several day's without a market entry signal....it happens to all strats!

 

keep it nice & simple, keep it "price based" & use as few price aids (indicators) as you can possibly get away with

 

such is the increased participation & liquidity in FX, you won't have to wait too long before your favorite instrument begins to open out & set up again....patience & discipline, they're your best friend when trading these animals!!

[Soultrader 12]

you're welcome.

 

I'm sure it's been mentioned on here someplace, but in case not: before anyone goes hell for leather incorporating a singular or combination piece of someone else's analysis into their arsenal......TEST IT - & test it thoroughly!

 

consistancy (or success) is measured not by how many pips you pull out of the market over a short, sharp period of "hot activity" - but by finding a method which suits your psychological approach to your preferred instrument & adopting a simple, workable template.

 

nothing works all of the time. but adopting a consistant plan & adhering to the similar signals will tell you 'when it's working or not'

 

capital preservation should be No 1 priority - period....when the market isn't playing ball (according to your strats), get the hell out & stay out until it slips back into line (according to your rules).

 

never force your strat, never chase the markets & definitely don't start tinkering or changing anything just because you've gone several day's without a market entry signal....it happens to all strats!

 

keep it nice & simple, keep it "price based" & use as few price aids (indicators) as you can possibly get away with

 

such is the increased participation & liquidity in FX, you won't have to wait too long before your favorite instrument begins to open out & set up again....patience & discipline, they're your best friend when trading these animals!!

 

Excellent comment Texxas.... alot of years and experience in your words. Price is KING. For new traders.... learn to trade price action and you will always remain in this game.

 

Very nice charts you posted there as well Texxas. My old mentor was a fib based trader so its nice to see Fib traders here

[Dr Who 10]

Anything will work some of the time, and if Pivots float your boat, then ensure you're aware of their strengths as well as their limitations (as with every form of t/a).

 

I haven't particularly found them to be of any great benefit across the cash FX instruments.

 

I prefer to use the prev day's close (5pm EST) as the fulcrum for next day's activity & use 2 averages (35 & 50%) of the prev session high-low as my R1-2 & S1-2 levels.

 

An alternative to that would be observing the prev 2 days high-low markers as your S1-2 & R1-2 markers, especially when price has been mired within a choppy range on the mid-frames (1-4hr)

 

Just my view! As ever, do your own diligence & TEST your observations thoroughly!!

 

Hi texxas,

 

Why do you use the 5pm close time for your pivots? Why not 4pm for example? Weekly pivots which day? Monthly pivots?

 

I asked a similar question in my thread then found this thread.

 

Good comments as usual:)

Dr.

[Buk 10]

looks like this question spans across 2 threads.....no matter, I'll repeat it here too........

 

we use the 5pm NY close as it's the "recognized" cut-off trigger, certainly amongst the provider desks we deal thru anyway.....it's also the (interest) rollover time period......

 

we calc the weekly pivots (for the following weeks activiry) based on Fridays close......same for monthly numbers - the close of the specific weekly/monthly bar on the final trading day of the week/month..........