Pivot Point Trading

Pivot Point Trading is like most other Forex trading strategies, it is based on probability, here are the statistics you should be aware of…

Pivot Point Trading

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Chance Of Hitting Pivot Point

  • Resistance 3 (R3) = 12%
  • Resistance 2 (R2) = 33%
  • Resistance 1 (R1) = 76%
  • Pivot Point = 76%
  • Support 1 (S1) = 76%
  • Support 2 (S2) = 33%
  • Support 3 (S3) = 12%

Chance Of Closing Inside Pivot Point

  • Resistance 3 (R3) = 94%
  • Resistance 2 (R2) = 82%
  • Resistance 1 (R1) = 56%
  • Support 1 (S1) = 56%
  • Support 2 (S2) = 82%
  • Support 3 (S3) = 94%

Personal Story

Pivot Point Trading “guru’s” in the world of Forex are amongst the “guru’s” who annoy me the most.

Here’s a popular strategy, it’s extremely well documented by many “guru’s”…

Go Long on a break of R1 and Target R2.  Some even suggest you wait for a break of R2 and Target R3.  Let’s examine both.

Go Long on a break of R1 and Target R2

If you break R1 and use a Stop of PP (Pivot Point) for a 1:1 Risk:Reward (most advise this) you have a 33% chance of R2 being hit!  You have a 33% chance of winning a 1:1 Risk:Reward trade!

Let’s examine an even crazier “guru” suggestion…

Go Long on a break of R2 and Target R3

If you break R2 and use a Stop of R1 for a 1:1 Risk:Reward you have a 12% chance of R3 being hit!  You have a 1 in 8 chance of winning a 1:1 Risk:Reward trade!

Pivot Point Trading “guru’s” in the world of Forex are amongst the “guru’s” who annoy me the most – Especially one’s stupid enough to suggest this strategy to fellow Forex traders!

Consider using Pivot Points as levels of Support and Resistance and you have a better chance of using them effectively.

My research is based on over 10 years of data.

Continue reading and access the next topic below…


Pivot Point Trading Summary

Pivot Points help identify potential opportunities but should not really be traded blindly.

Common tools to assist trade entry are:

These statistics were derived from the FREE How To Really Use Pivots eBook by Jon McFarlane

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