For you typical day trader, using the Pivot Point (PP) indicator is one of the right trading techniques. Typically, which describes price movements in the range of one trading day, many day traders expect profits by using a pivot point.
Pivot points are used to determine the potential area of support and resistance in technical analysis by means of certain calculations. This calculation refers to yesterday's moving average. This is what makes the objective pivot point determine the support and resistance levels.
You don't have to bother counting manually. In addition to using the pivot point calculator application, you can also see a list of pivot points here.
Here are some tips for you who choose to become a day trader with a pivot point strategy.
1. Determine the time to enter the position wisely
Pivot points are used with the aim that you can enter and exit positions in the same day as long as your chosen forex market is running. One of them when the European session is considered to provide the biggest trading opportunity. Especially when overlapping European and American sessions there will be a lot of market participants. You can choose this.
2. Pivot points are considered to be the main key to the attention of traders
Market trends are one important thing that must be considered by traders before determining a position. Using a pivot point can help you to see the key level of a market trend because you will be shown a potential level to enter the position of yesterday's trading average with the support level 1 (S1), resistance 1 (R1), support 2 (S2) , resistance 2 (R2), support 3 (S3), and resistance 3 (R3).
3. Enter the position when the price touches R1 and S1
Levels R1 and S1 are the most potential levels to enter positions from the pivot point level. Note if the price moves often touches that level and is stuck in that area, then it is a sign of the potential area to enter the position.
4. When the price reaches R2, R3 or S2, S3 is time to go out trading
When the price has reached this level, it's time for you to exit trading. This is because it is very likely that the conditions are overbought or oversold. But you can take the opposite position when the price reverses. For example when the market trend is bullish, you enter a buy position and exit the position when the price reaches R3 level. This reversal or bearish condition is a trading opportunity that you can use to enter short positions.
5. Do not forget to put stop loss
It is important to determine the stop loss in each transaction. This is done to anticipate large losses in your trading activities. When entering short positions, pairs above the resistance level. When entering long positions, place below the support level.
Market conditions sometimes give false signals so that you can just determine your position. Therefore, it is a good idea to train your technical analysis through Riskless Trading by determining the entry point potential using Pivot Points. Please create a demo account here.
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