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Aspects of trading with a Pivot Points indicator
Aspects of trading with a Pivot Points indicator

To create a good trading strategy for the currency market, you will need to use various technical indicators. Pivot Points can be a great supplement to existing tools. With its help, you will be able to see reversal levels and adjust your behavior in the market accordingly.

Getting started

The principle behind trading with technical indicators is very simple. It is based on the immutable law of life that everything is cyclical, which also applies to financial markets. If a trader understands that the trend will reverse and go back when a certain price is reached, a similar situation may well repeat itself in the future. The person cannot affect the probability of the pattern but should keep it in mind.

The Pivot Points indicator helps traders to make some assumptions about asset dynamics:

  1. The longer the timeframe the higher the likelihood that the assumption will come true.
  2. The closer the price is to the level drawn by the script and the higher asset volatility the more likely a trend reversal.
  3. The lower asset volatility and the closer the price is to the level drawn by the script the more likely a trend continuation (a breakout of the level).

Just three rules will allow even a novice Forex trader to create an efficient trading system and have profitable trades more often.

How to use the indicator

Pivot Points allow you to create countless patterns of market behavior. To quickly understand the tool, we suggest considering the “rebound” strategy:

  1. If the price has reached the set line and a reversal candle has been formed, it is time to sell the asset.
  2. It is better to set a stop loss in the middle of the segment to the next level in the direction of the movement.
  3. A take profit is set only at the first level, which the price is supposed to reach after a reversal.

Naturally, this behavioral pattern can be improved and adjusted with the help of additional indicators.

Useful tips

The benefits of using Pivot Points is that you get a multipurpose assistant that analyzes the market situation and predicts events. However, in each case, Forex traders must decide on their own whether to enter a trade or not.

The Pivot Points indicator is efficient and straightforward, but you should never forget about money management when trading with it. Do not risk more than 2 percent of your capital. This will protect you from becoming bankrupt in case your trading strategy proves ineffective.

What is of paramount importance is to remember that there are no indicators in the market with 100% success rates. Like any other tool, Pivot Points require confirmation of their signals, so developing a strategy based only on this indicator is almost as unwise as it is to trust all its readings thoughtlessly. Technical analysis is there to help a trader understand market trends and predict the PROBABLE course of events, but nothing beyond that.

If you doubt your abilities and worry that you lack experience and knowledge to devise an efficient strategy, put your trust in automated systems. This trading adviser is developed by the best experts in the industry. It is devoid of emotion and does not get tired, and most importantly, does not require time from a trader. All you need to do is simply launch the program and it will constantly enter into potentially profitable trades, generating you an income.

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