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Wednesday, April 23, 2008
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The First Commercially Available Stock Trading "Robot" Which Earns $346.77 Per Week
Forex Pivot Points- Mapping Your Time Frame
It is useful to have a map and be able to see where the price is relative to previous market action. This way we can see how is the sentiment of traders and investors at any given moment, it also gives us a general idea of where the market is heading during the day. This information can help us decide which way to trade.
Pivot points, a technique developed by floor traders, help us see where the price is relative to previous market action.
As a definition, a pivot point is a turning point or condition. The same applies to the Forex market, the pivot point is a level in which the sentiment of the market changes from �bull� to �bear� or vice versa. If the market breaks this level up, then the sentiment is said to be a bull market and it is likely to continue its way up, on the other hand, if the market breaks this level down, then the sentiment is bear, and it is expected to continue its way down. Also at this level, the market is expected to have some kind of support/resistance, and if price can't break the pivot point, a possible bounce from it is plausible.
Pivot points work best on highly liquid markets, like the spot currency market, but they can also be used in other markets as well.
Forex Pivot Points
In a few words, pivot point is a level in which the sentiment of traders and investors changes from bull to bear or vice versa.
Why PP work?
They work simply because many individual traders and investors use and trust them, as well as bank and institutional traders. It is known to every trader that the pivot point is an important measure of strength and weakness of any market.
Calculating pivot points
There are several ways to arrive to the Pivot point. The method we found to have the most accurate results is calculated by taking the average of the high, low and close of a previous period (or session).
Pivot point (PP) = (High + Low + Close) / 3
Take for instance the following EUR/USD information from the previous session:
Open: 1.2386
High: 1.2474
Low: 1.2376
Close: 1.2458
The PP would be,
PP = (1.2474 + 1.2376 + 1.2458) / 3 = 1.2439
What does this number tell us?
It simply tells us that if the market is trading above 1.2439, Bulls are winning the battle pushing the prices higher. And if the market is trading below this 1.2439 the bears are winning the battle pulling prices lower. On both cases this condition is likely to sustain until the next session.
Since the Forex market is a 24hr market (no close or open from day to day) there is a eternal battle on deciding at white time we should take the open, close, high and low from each session. From our point of view, the times that produce more accurate predictions is taking the open at 00:00 GMT and the close at 23:59 GMT .
Besides the calculation of the PP, there are other support and resistance levels that are calculated taking the PP as a reference.
Support 1 (S1) = (PP * 2) � H
Resistance 1 (R1) = (PP * 2) - L
Support 2 (S2) = PP � (R1 � S1)
Resistance 2 (R2) = PP + (R1 � S1)
Where , H is the High of the previous period and L is the low of the previous period
Continuing with the example above, PP = 1.2439
S1 = (1.2439 * 2) - 1.2474 = 1.2404
R1 = (1.2439 * 2) � 1.2376 = 1.2502
R2 = 1.2439 + (1.2636 � 1.2537) = 1.2537
S2 = 1.2439 � (1.2636 � 1.2537) = 1.2537
These levels are supposed to mark support and resistance levels for the current session.
On the example above, the PP was calculated using information of the previous session (previous day.) This way we could see possible intraday resistance and support levels. But it can also be calculated using the previous weekly or monthly data to determine such levels. By doing so we are able to see the sentiment over longer periods of time. Also we can see possible levels that might offer support and resistance throughout the week or month. Calculating the Pivot point in a weekly or monthly basis is mostly used by long term traders, but it can also be used by short time traders, it gives us a good idea about the longer term trend.
S1, S2, R1 AND R2...? An Objective Alternative
As already stated, the pivot point zone is a well-known technique and it works simply because many traders and investors use and trust it. But what about the other support and resistance zones (S1, S2, R1 and R2,) to forecast a support or resistance level with some mathematical formula is somehow subjective. It is hard to rely on them blindly just because the formula popped out that level. For this reason, we have created an alternative way to map our time frame, simpler but more objective and effective.
We calculate the pivot point as showed before. But our support and resistance levels are drawn in a different way. We take the previous session high and low, and draw those levels on today's chart. The same is done with the session before the previous session. So, we will have our PP and four more important levels drawn in our chart.
LOPS1, low of the previous session.
HOPS1, high of the previous session.
LOPS2, low of the session before the previous session.
HOPS2, high of the session before the previous session.
PP, pivot point.
These levels will tell us the strength of the market at any given moment. If the market is trading above the PP, then the market is considered in a possible uptrend. If the market is trading above HOPS1 or HOPS2, then the market is in an uptrend, and we only take long positions. If the market is trading below the PP then the market is considered in a possible downtrend. If the market is trading below LOPS1 or LOPS2, then the market is in a downtrend, and we should only consider short trades.
The psychology behind this approach is simple. We know that for some reason the market stopped there from going higher/lower the previous session, or the session before that. We don't know the reason, and we don't need to know it. We only know the fact: the market reversed at that level. We also know that traders and investors have memories, they do remember that the price stopped there before, and the odds are that the market reverses from there again (maybe because the same reason, and maybe not) or at least find some support or resistance at these levels.
What is important about his approach is that support and resistance levels are measured objectively; they aren't just a level derived from a mathematical formula, the price reversed there before so these levels have a higher probability of being effective.
Our mapping method works on both market conditions, when trending and on sideways conditions. In a trending market, it helps us determine the strength of the trend and trade off important levels. On sideways markets it shows us possible reversal levels.
Forex Snippets
forex chart
What is Forex or Foreign Exchange: It is the largest financial market in the world, with a volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.
currency convertor
FX traders include governments, corporations and fund managers doing business with foreign countries, that need to exchange one currency for another, and speculators who seek to profit from price movements in the markets.
forex trade
Historically, SMBs and individual investors have had limited access to the forex market. For decades, major banks, multinational corporations and other participants, trading in large transaction sizes and volumes, have dominated this market. However, just like many other business segments technology has lowered the barriers of entry and opened up this attractive marketplace to a new breed of investors and speculators.
More Forex Trade Information
Forex - Weak Data Is Only Beginning to Hurt the US Dollar
Sat, 18 Nov 2006 16:29:00 GMT
FXCM - DAILYFX Fundamentals 11-17-06
By Kathy Lien, Chief Strategist of www.
Forex Trading System
Forex made Easy
Easy Forex
Global Forex Trading | What Is Forex
¶ 6:53 AM 0 comments
Forex Trade Article Of The Month
The First Commercially Available Stock Trading "Robot" Which Earns $346.77 Per Week
Forex Pivot Points- Mapping Your Time Frame
It is useful to have a map and be able to see where the price is relative to previous market action. This way we can see how is the sentiment of traders and investors at any given moment, it also gives us a general idea of where the market is heading during the day. This information can help us decide which way to trade.
Pivot points, a technique developed by floor traders, help us see where the price is relative to previous market action.
As a definition, a pivot point is a turning point or condition. The same applies to the Forex market, the pivot point is a level in which the sentiment of the market changes from �bull� to �bear� or vice versa. If the market breaks this level up, then the sentiment is said to be a bull market and it is likely to continue its way up, on the other hand, if the market breaks this level down, then the sentiment is bear, and it is expected to continue its way down. Also at this level, the market is expected to have some kind of support/resistance, and if price can't break the pivot point, a possible bounce from it is plausible.
Pivot points work best on highly liquid markets, like the spot currency market, but they can also be used in other markets as well.
Forex Pivot Points
In a few words, pivot point is a level in which the sentiment of traders and investors changes from bull to bear or vice versa.
Why PP work?
They work simply because many individual traders and investors use and trust them, as well as bank and institutional traders. It is known to every trader that the pivot point is an important measure of strength and weakness of any market.
Calculating pivot points
There are several ways to arrive to the Pivot point. The method we found to have the most accurate results is calculated by taking the average of the high, low and close of a previous period (or session).
Pivot point (PP) = (High + Low + Close) / 3
Take for instance the following EUR/USD information from the previous session:
Open: 1.2386
High: 1.2474
Low: 1.2376
Close: 1.2458
The PP would be,
PP = (1.2474 + 1.2376 + 1.2458) / 3 = 1.2439
What does this number tell us?
It simply tells us that if the market is trading above 1.2439, Bulls are winning the battle pushing the prices higher. And if the market is trading below this 1.2439 the bears are winning the battle pulling prices lower. On both cases this condition is likely to sustain until the next session.
Since the Forex market is a 24hr market (no close or open from day to day) there is a eternal battle on deciding at white time we should take the open, close, high and low from each session. From our point of view, the times that produce more accurate predictions is taking the open at 00:00 GMT and the close at 23:59 GMT .
Besides the calculation of the PP, there are other support and resistance levels that are calculated taking the PP as a reference.
Support 1 (S1) = (PP * 2) � H
Resistance 1 (R1) = (PP * 2) - L
Support 2 (S2) = PP � (R1 � S1)
Resistance 2 (R2) = PP + (R1 � S1)
Where , H is the High of the previous period and L is the low of the previous period
Continuing with the example above, PP = 1.2439
S1 = (1.2439 * 2) - 1.2474 = 1.2404
R1 = (1.2439 * 2) � 1.2376 = 1.2502
R2 = 1.2439 + (1.2636 � 1.2537) = 1.2537
S2 = 1.2439 � (1.2636 � 1.2537) = 1.2537
These levels are supposed to mark support and resistance levels for the current session.
On the example above, the PP was calculated using information of the previous session (previous day.) This way we could see possible intraday resistance and support levels. But it can also be calculated using the previous weekly or monthly data to determine such levels. By doing so we are able to see the sentiment over longer periods of time. Also we can see possible levels that might offer support and resistance throughout the week or month. Calculating the Pivot point in a weekly or monthly basis is mostly used by long term traders, but it can also be used by short time traders, it gives us a good idea about the longer term trend.
S1, S2, R1 AND R2...? An Objective Alternative
As already stated, the pivot point zone is a well-known technique and it works simply because many traders and investors use and trust it. But what about the other support and resistance zones (S1, S2, R1 and R2,) to forecast a support or resistance level with some mathematical formula is somehow subjective. It is hard to rely on them blindly just because the formula popped out that level. For this reason, we have created an alternative way to map our time frame, simpler but more objective and effective.
We calculate the pivot point as showed before. But our support and resistance levels are drawn in a different way. We take the previous session high and low, and draw those levels on today's chart. The same is done with the session before the previous session. So, we will have our PP and four more important levels drawn in our chart.
LOPS1, low of the previous session.
HOPS1, high of the previous session.
LOPS2, low of the session before the previous session.
HOPS2, high of the session before the previous session.
PP, pivot point.
These levels will tell us the strength of the market at any given moment. If the market is trading above the PP, then the market is considered in a possible uptrend. If the market is trading above HOPS1 or HOPS2, then the market is in an uptrend, and we only take long positions. If the market is trading below the PP then the market is considered in a possible downtrend. If the market is trading below LOPS1 or LOPS2, then the market is in a downtrend, and we should only consider short trades.
The psychology behind this approach is simple. We know that for some reason the market stopped there from going higher/lower the previous session, or the session before that. We don't know the reason, and we don't need to know it. We only know the fact: the market reversed at that level. We also know that traders and investors have memories, they do remember that the price stopped there before, and the odds are that the market reverses from there again (maybe because the same reason, and maybe not) or at least find some support or resistance at these levels.
What is important about his approach is that support and resistance levels are measured objectively; they aren't just a level derived from a mathematical formula, the price reversed there before so these levels have a higher probability of being effective.
Our mapping method works on both market conditions, when trending and on sideways conditions. In a trending market, it helps us determine the strength of the trend and trade off important levels. On sideways markets it shows us possible reversal levels.
Forex Snippets
forex chart
What is Forex or Foreign Exchange: It is the largest financial market in the world, with a volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.
currency convertor
FX traders include governments, corporations and fund managers doing business with foreign countries, that need to exchange one currency for another, and speculators who seek to profit from price movements in the markets.
forex trade
Historically, SMBs and individual investors have had limited access to the forex market. For decades, major banks, multinational corporations and other participants, trading in large transaction sizes and volumes, have dominated this market. However, just like many other business segments technology has lowered the barriers of entry and opened up this attractive marketplace to a new breed of investors and speculators.
More Forex Trade Information
Forex - Weak Data Is Only Beginning to Hurt the US Dollar
Sat, 18 Nov 2006 16:29:00 GMT
FXCM - DAILYFX Fundamentals 11-17-06
By Kathy Lien, Chief Strategist of www.
Forex Trading System
Forex made Easy
Easy Forex
Global Forex Trading | What Is Forex
Labels: Online Forex | Online Forex Trading
Today's Forex And Forex Trading News
Featured Forex System Article
Quick Forex Ideas
forex news
The primary factors influencing exchange rates include the balance of payments, the state of the economy, implications drawn from chart analysis as well as political and psychological factors.
foreign exchange calculator
Forex/Currency Trading: It is a sentiment game w/ a crowd mentality where even the best players w/ the best forecasts are tricked out of good positions by the magic of price action.
More info on Forex trading
forex trading software
When it comes to the Forex market, you should know that what you assume to be true may not be true at all. You may think that you can use the Forex market to protect your investments. You have learned from reading this however that the Forex may not protect your investments, and one should be diligent in watching their investments in order to avoid anything catastrophic. You may also think that you can get rich quickly using the Forex market. The truth is that short term trading, which is notorious for turning profits quickly, is not for the beginner. Those who have traded for years may try short term investing, but it is very risky indeed. Lastly, you may think that leverage will help you "play with the big boys" and still stay safe. This can be a horrible assumption and many people will over leverage themselves if they are not careful. So, do research, be smart, and think before you act when dealing with the Forex.
More Forex System Info
5 foreign stocks we love
Wed, 09 Apr 2008 12:29:17 EDT
Concerned about your domestic investments in today's troubled economy? Consider these international companies, which can be easily purchased right here in the U.S.
¶ 6:50 AM 0 comments
Featured Forex System Article
Quick Forex Ideas
forex news
The primary factors influencing exchange rates include the balance of payments, the state of the economy, implications drawn from chart analysis as well as political and psychological factors.
foreign exchange calculator
Forex/Currency Trading: It is a sentiment game w/ a crowd mentality where even the best players w/ the best forecasts are tricked out of good positions by the magic of price action.
More info on Forex trading
forex trading software
When it comes to the Forex market, you should know that what you assume to be true may not be true at all. You may think that you can use the Forex market to protect your investments. You have learned from reading this however that the Forex may not protect your investments, and one should be diligent in watching their investments in order to avoid anything catastrophic. You may also think that you can get rich quickly using the Forex market. The truth is that short term trading, which is notorious for turning profits quickly, is not for the beginner. Those who have traded for years may try short term investing, but it is very risky indeed. Lastly, you may think that leverage will help you "play with the big boys" and still stay safe. This can be a horrible assumption and many people will over leverage themselves if they are not careful. So, do research, be smart, and think before you act when dealing with the Forex.
More Forex System Info
5 foreign stocks we love
Wed, 09 Apr 2008 12:29:17 EDT
Concerned about your domestic investments in today's troubled economy? Consider these international companies, which can be easily purchased right here in the U.S.
