It is useful to
have a map and be able to see where the cost is comparative to past industry
activity. This way we can see how is the feeling of traders and traders at any
given time, it also gives us a common concept of where the industry is going
during the day. This details can help us decide which way to business.
Pivot factors, a
strategy designed by ground traders, help us see where the cost is comparative
to past industry activity.
As a description,
a rotate factor is a stage or situation. The same relates to the Foreign
exchange industry, the rotate factor is a stage in which the feeling of the
industry changes from "bull" to "bear" or viceversa. If the
industry smashes this stage up, then the feeling is said to be a fluff industry
and it is likely to proceed its way up, on the other hand, if the industry
smashes this stage down, then the feeling is keep, and it is predicted to
proceed its way down. Also at this stage, the industry is predicted to have
some type of support/resistance, and if cost can't separate the rotate factor,
a possible jump from it is possible.
Pivot factors
perform best on extremely fluid marketplaces, like the identify currencies
industry, but they can also be used in other marketplaces as well.
Pivot Points
In a few terms,
rotate factor is a stage in which the feeling of traders and traders changes
from fluff to keep or viceversa.
Why PP work?
They perform
basically because many personal traders and traders use and believe in them, as
well as financial institution and institutional traders. It is known to every
investor that the rotate factor is an essential evaluate of durability and weak
point of any industry.
Calculating rotate
points
There are several
tips on how to appear to the Pivot factor. The strategy we found to have the
most precise outcomes is calculated by getting the normal of the great, low and
near of a past interval (or session).
Pivot factor (PP)
= (High + Low + Close) / 3
Take for example
the following EUR/USD details from the past 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 basically
informs us that if the industry is dealing above 1.2439, Bulls are successful
the fight forcing the costs greater. And if the industry is dealing below this
1.2439 the holds are successful the fight taking costs reduced. On both
situations this situation is likely to maintain until the next interval.
Since the Foreign
exchange industry is a 24hr industry (no near or start from day to day) there
is a long lasting fight on determining at bright time we should take the start,
near, great and low from each interval. From our perspective, the times that
generate more precise forecasts is getting the start at 00:00 GMT and the near
at 23:59 GMT.
Besides the
computation of the PP, there are other assistance and stage of resistance
stages that are calculated getting the PP as a referrals.
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 A
lot of the past interval and L is the low of the past 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 stages are
expected to level assistance and stage of resistance stages for the present
interval.
On the example
above, the PP was calculated using details of the past interval (previous day.)
This way we could see possible intraday stage of resistance and assistance
stages. But it can also be calculated using the past each weeks time or monthly
information to figure out such stages. By doing so we are able to see the
feeling over more time time times. Also we can see possible stages that might
provide assistance and stage of resistance throughout the weeks time or 30
days. Determining the Pivot factor in a each weeks time or monthly base is mostly
used by lengthy lasting traders, but it can also be used by brief interval of
your energy and energy traders, it gives us a wise decision about the lengthy
run pattern.
S1, S2, R1 AND
R2...? An Purpose Alternative
As already
mentioned, the rotate factor location is a well-known strategy and it performs
basically because many traders and traders use and believe in it. But what
about the other assistance and stage of resistance areas (S1, S2, R1 and R2,)
to prediction a assistance or stage of stage of resistance with some
statistical system is somehow very subjective. It is hard to depend on them
thoughtlessly just because the system jumped out that stage. Because of this,
we have designed an substitute way to map our interval, easier but more
objective and efficient.
We determine the
rotate factor as revealed before. But our assistance and stage of resistance
stages are used a different way. We take the past interval great and low, and
sketch those stages on modern information. The same is done with the interval
before the past interval. So, we will have our PP and four more essential
stages used our information.
LOPS1, low of the
past interval.
HOPS1, great of
the past interval.
LOPS2, low of the
interval before the past interval.
HOPS2, great of
the interval before the past interval.
PP, rotate factor.
These stages will
tell us the durability of the industry at any given time. If the industry is
dealing above the PP, then the industry is regarded in a possible uptrend. If
the industry is dealing above HOPS1 or HOPS2, then the industry is in an
uptrend, and we only take lengthy roles. If the industry is dealing below the
PP then the industry is regarded in a possible downtrend. If the industry is
dealing below LOPS1 or LOPS2, then the industry is in a downtrend, and we
should only consider brief investments.
The mindset behind
this strategy is simple. We know that for some purpose the industry ceased
there from going higher/lower the past interval, or the interval before that.
We don't know the purpose, and we don't need to know it. We only know the fact:
the industry changed at that stage. We also know that traders and traders have
reminiscences, they do keep in mind that the cost ceased there before, and the
chances are that the industry removes from there again (maybe because the same
purpose, and maybe not) or at least find some assistance or stage of resistance
at these stages.
What is essential
about his strategy is that assistance and stage of resistance stages are
calculated objectively; they aren't just a stage resulting from a statistical
system, the cost changed there before so these stages have a greater
possibility of being efficient.
Our applying
strategy performs on both industry circumstances, when popular and on back and
forth circumstances. In a popular industry, it allows us figure out the
durability of the pattern and business off essential stages. On back and forth
marketplaces it reveals us possible change stages.
How we use our
applying method?
We at
StraightForex (www.straightforex.com) use the applying strategy in three
different ways: as a pattern recognition (measure of the durability of the
trend), a dealing plan using essential stages with cost conduct as a dealing
indication and to set the danger compensate rate (RR) of any given business
based on where the is the industry comparative to the past interval.
