Now start to learn more about pivot point trading to improve your trading style and here are 5 tips for you:
1.If the market opens below above the resistance or below the support of the previous day, it is called a distant opening. This means that the price has a somewhat unusual behavior, meaning that it might correct itself soon. It is harder to trade with those signals, and this is why this method is used only by advanced traders.
2.Don’t enter a trade unless the price takes a clear direction, breaking the pivot points or rebounding from those. Those details are established considering your strategy as a trader, on how many pips you are trying to make and on your profile as an investor.
3.The support and resistance are considered as the daily floor and ceiling of the chart, therefore normally, the price must not move past those. Of course, anything can happen in Forex, especially in a market affected by rumors, but the general tendency of the price is to get back to the central pivot. If the price moves far from the central pivot, it means that your opportunity to trade is getting weaker.
4.When you trade on pivots, keep count of the market on the medium term. If the market trends strongly, the pivots will be breached easier. The traders can take advantage in both scenarios, using channel or breakout trades.
5.If you want to trade on pivots, you will have to use t when the chart is close to the earliest pivot of the day, as this way, you will have an increased chance to open a successful position.
Do you follow any one of the above mentioned tips?. Kindly leave a comment