2013년 11월 23일 토요일

About 'forex system trading'|Forex Software System Trading







About 'forex system trading'|Forex Software System Trading








The               'Pivot               point               trading               system'               is               a               method               of               predicting               the               movement               of               a               financial               instrument               such               as               currency,               and               is               used               by               day               traders               and               other               market               speculators.

The               pivot               points               are               mathematically               determined               points               of               price               support               and               resistance               and               the               pivot               point               strategy               applies               trend               hypotheses               to               the               pivot               points               to               predict               future               price               movement.

For               example,               if               a               currency's               closing               price               of               1.762               is               below               a               price               average               of               1.765,               and               the               previous               days               close               was               also               1.765,               today's               closing               price               has               dropped               below               the               pivot               points               where               support               is               established               around               the               prices               moving               average.

For               a               trader,               this               drop               through               the               pivot               point               would               signal               a               potential               entry               point               to               'sell               short'               i.e.

bet               on               the               price               going               down.

The               usefulness               of               the               Pivot               Point               System:
               The               pivot               point               system               is               useful               because               it               gives               traders               an               idea               of               where               to               trade.

The               method               brings               a               mathematically               derived               sense               of               order,               to               a               possible               free               flowing               series               of               price               movement.

In               other               words               it               assists               in               identifying               patterns               and               price               movements               so               the               trader               is               better               equipped               to               take               advantage               of               those               patterns.

In               the               case               of               the               pivot               point               system               those               patterns               are               drops               and               rises               below               and               above               the               pivot               point,               support               levels               and               resistance               levels.
               How               the               pivot               points               are               used:
               When               all               the               pivot               points               are               determined               a               day               trader               will               watch               the               price               movement               of               a               price               throughout               the               day,               when               a               suitable               entry               or               exit               point               is               indicated               by               the               pivot               point               system,               the               trader               may               then               decided               to               take               a               financial               position               by               buying               or               selling.

While               the               pivot               point               method               is               primarily               a               short-term               method,               it               may               in               some               case               be               applied               long               term               if               the               analyst               so               chooses.

In               such               an               instance,               an               analyst               may               replace               the               previous               days               average               price               with               a               moving               average.
               The               stronger               indicator               in               a               pivot               point               system               is               the               primary               pivot               point               such               as               the               previous               days               price               average               in               short               term               analysis,               and               the               moving               average               in               long               term               analysis.

When               a               price               breaks               above               this               point,               market               sentiment               is               indicated               as               'bullish'               suggesting               a               buy               may               be               in               order.

The               reverse               is               the               case               for               drops               below               the               main               pivot               point.

The               resistance               and               support               levels               either               confirm               or               dis-confirm               the               primary               pivot               points               indication               by               following               the               movement               trend               or               not               i.e.

if               the               resistance               level               is               also               broken               in               addition               to               the               pivot               point               market               sentiment               is               'bullish'               and               if               the               support               level               as               well               as               the               pivot               point               are               broken               downward,               sentiment               is               'bearish''.

All               these               indicators               can               be               presented               on               charts               and               graphs               pre-calculated               by               software               programs               for               a               more               efficient               use               of               pivot               point               system.
               Calculating               the               Pivot               Point:
               The               main               information               used               in               this               trading               analysis               is               the               1)               average               price               2)               support               level,               3)               resistance               level.

Once               the               trader               knows               what               these               indicators               are               (s)he               may               then               proceed               to               either               enter               or               exit               a               financial               position               in               a               particular               stock,               commodity,               currency               etc.

as               prices               move               through,               above               and               below               these               price               levels.

There               are               several               ways               to               calculate               pivot               points               depending               on               what               one               wants               the               pivot               point               to               measure.

Below               are               two               methods               for               calculating               the               pivot               point:
               Method               A:               Simple               Average               Price               Method
               -Calculate               previous               days               average               price               by               adding               the               high,               low               and               close               prices               and               then               dividing               by               three.


               -When               the               next               days               price               moves               above               or               below               this               level               a               pivot               point               has               be               established.
               Method               B:               'Five               Point               Pivot               Point'
               This               method               is               called               the               five               point               pivot               point               method               because               it               uses               five               points               rather               than               one               average               price               in               method               A.

In               this               method               the               five               points               are               the               pivot               point,               first               level               of               resistance,               the               first               level               of               support,               the               second               level               of               resistance               and               the               second               level               of               support.
               1)               The               Pivot               point:               Using               method               A               above               will               yield               the               pivot               point               calculation.
               2)               Resistance               point               1:               To               calculate               resistance               point               1,               multiply               the               pivot               point               by               2               then               subtract               the               previous               day's               low.
               3)               Support               point               1:               To               Determine               the               first               support               level               multiply               the               pivot               point               by               2               but               subtract               the               previous               days               high               instead               of               subtracting               the               previous               day's               low.
               4)               Resistance               point               2:               Subtract               the               result               of               #3               from               the               result               of               #               2               then               add               the               result               
               to               #1.
               5)               Support               point               2:               Subtract               the               result               of               #3               from               the               result               of               #2,               but               then               subtract               the               result               of               #1               instead               of               adding               it.
               These               five               steps               gives               one               the               five               pivot               points               with               which               the               trader               on               analyst               uses               to               determine               perceived               suitable               entry               and               exit               points.
               Summary:
               The               pivot               point               trading               system               is               one               of               many               techniques               used               in               what               is               called               the               'technical               analysis'               of               financial               instruments.

The               primary               purpose               of               the               pivot               point               trading               system               is               to               determine               whether               or               not               a               pre-determined               price               level               has               been               passed               through               or               dropped               below.

Several               techniques               of               price               movement               interpretation               have               been               developed               around               the               pivot               point               method               such               as               pivot               point               reversals               and               complex               pivot               points               that               are               formed               over               a               few               days.

However,               these               differing               interpretations               center               around               the               primary               idea               there               is               a               pivot               point               which               through               which               prices               either               moved               behind,               past               or               in               tandem               with.

The               pivot               point               trading               system               is               used               in               foreign               exchange               analysis               but               may               also               be               applied               to               stock               and               other               financial               instrument's               price               movements.

The               pivot               point               trading               system               is               one               of               many               technical               analysis               tools               available               to               day               traders               and               may               or               may               not               indicate               the               actual               future               movement               of               a               price.

However,               by               using               the               pivot               point               trading               system,               a               day               trader               is               better               equipped               and               prepared               to               estimate               future               price               movements.
               Sources:
               http://www.squidoo.com/pivotpointforextrading/               
               http://ezinearticles.com/?Using-Pivot-Points-For-G               reater-Profits&id=126794               
               http://www.investopedia.com/articles/technical/04/               041404.asp               
               http://www.incrediblecharts.com/technical/pivot_po               int_reversal.htm               
               http://www.thebulltrader.com/612/strategies-for-tr               ading-stock-pivot-points/






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