Pivot Point trading as a day trade
Generally we aim to buy support and sell resistance regardless of the prevailing trend, as often the biggest moves occur when the trend changes direction. This is but one of our Forex Trading Methods.
For this we always use the points calculated and displayed on MT4 using the fmm_pivots indicator. We trade all pivot lines the M, R, S, L2, H2 and PP.
The idea behind it is to remain totally focused and enter a trade not expecting any particular outcome, hence, we are happy to reverse our entry if proved wrong. Usually we can expect a move to occur at all pivot lines, so that reversing the trade often places one on the right side of the market.
The main advantage of this system is that costs are kept to a minimum, the max cost to enter a position and SAR (Stop and reverse) it is 16 pips. However if entered 1 pip either side of the line, the cost can be reduced to 4-5 pips each way. Having the Stocs at extreme O/B or O/S can help the trade but is not mandatory.
When entering a counter trend trade enter in 2 ½ positions, 1st at the PP and second when the price has moved 2-3 pips in trade direction.
Trading Hours (all in UK times)
07:00 – 11:00
15:30 – 17:00
Potential Turning times
The market tends to change direction around specific times:
12:30 – 13:30
14:30 – 15:30
After the London close too, but our offices are firmly shut by then, the profits are banked and we don’t trade the close.
1.Trades taken before 07:40 are considered as scalps, never let a winning scalp become a loser.
2.A long trade is initiated when a pivot point is hit from above, or stalls a few pips above it; place a SAR trade short at the same time.
3.A Short trade is initiated when a pivot point is hit from below, or stalls a few pips below it; place a SAR trade long at the same time.
4.Half a position is shed when the next PP is hit or stalls near it, the rest is set to SL 4 pips above/below the PP entered at.
5.Second half is always reversed at the second PP with a SAR in the continued trade direction. If there are several tests of that PP then place your SAR 2 pips below the lowest low or above the highest high. If this requires more than 8 pips DO NOT SAR, exit at PP and re assess.
6.Watch the 10 and 20 emas on the 5 minutes charts, if the third bar fails to close on the right side of the 10ema exit half, and if the 5th bar fails to close on the right side of the 20ema close position.
7.After a big news event wait at least 2 5 minute bars to avoid the whipsaw, or enter ½ position with a SAR.
I use Forex Rebellion for confirmation of 4 hours turns and entries for swings. Find out about it by clicking here ==> Forex Rebellion.
The idea behind this method is to develop a good feel for the turnaround points so that eventually trading is intuitive.
Read ‘Trading in the Zone’ by Mark Douglas
Read ‘Come into my trading room’ by Alexander Elder
Read ‘The science of getting rich’ by Wallace D. Wattles
Stop looking for the Holy Grail – the Holy Grail is internal, always has been.
This system does not allow for the losses, you only incur small expenses occasionally.
Review every trade – see what you did well and what not.
Keep a spreadsheet with all entries and include an analysis sheet.
Get the Rover North system ==> here
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