More Day Trading Answers
Question Library
Ask a question about Day Trading
Volunteer
Experts of the Month
Expert Login
Awards
About Us
Tell friends
Link to Us
Disclaimer
|
| |
|
|
| |
| | | |
About Mark Hodge
Expertise
Questions related to technical analysis, strategies, risk, trading plans, trading psychology and money management. Experience in trading all markets and timeframes with expertise in futures (e-minis, currency futures, commodities, European Markets-DAX) and equity options. Unfortunately I am not allowed to offer any specific trading advice (i.e. should I go long the DAX today).
Experience
I have been involved in the industry since 1995 working for Morgan Stanley Dean Witter and American Express Financial Advisors before becoming a full time trader. As Head Education Coach with Rockwell Trading I have coached hundreds of students around the world to achieve their trading goals with simple strategies, a sound trading plan and proper money management for the leveraged markets.
Organizations
Currently serving as Rockwell Trading's Head Education Coach www.rockwelltrading.com and moderator for Rockwell's Day Trading Forum at www.rockwelltrading.com/forum
Education/Credentials
Formerly licensed as a financial advisor with Series 6, 7, and 63 licenses. B.A. in Organizational Communications with a Business Minor from California State University, Sacramento.
Past/Present Clients
I have worked with institutional traders, brokers, proprietary trading firms and private traders but respect their anonymity.
One of the few distinguished World Cup Advisors www.worldcupadvisors.com
| | |
| |
You are here: Experts > Money > Day Trading > Day Trading > Pivot Points
Expert: Mark Hodge
Date: 4/17/2008
Subject: Pivot Points
Question
QUESTION: Hello:
When pivot points are calculated, should they be calculated from the previous day or as current as possible?
I thank you for your reply and answer.
ANSWER: Hello Kenneth,
There are several ways to calculating pivot points, but the standard is using the previous day's high and low. I would encourage you to base your calculations on the high, low, and close of the standard trading session, instead of the overnight if you are trading a market with extended trading hours.
If calculating pivots on the E-Mini S&P, I would use 9:30-16:15 ET and the high, low and close from this period.
If calculating pivots on the Forex markets, you might consider using the 24 hour cycle starting from the close of a session. Example: $EUR-USD 4pm ET - 4pm ET.
Happy Trading!
Mark
---------- FOLLOW-UP ----------
QUESTION: Hello:
I want to thank you for your helpful reply. I do have a follow-up question.
Can you explain more precisely how to calculate the pivots on the FOREX market as you mentioned in your reply? How are the high, low, and close taken from the 4 pm ET . I'm somewhat confused as to how to interpret the meaning from your suggestion.
I thank you for your help and assistance.
Answer
Hello Kenneth,
Here we have your typical pivot point calculation:
Pivot Point (PP) = (High + Low + Close) / 3
Resistance 1 (R1) = (2 x PP) - Low
Support 1 (S1) = (2 x PP) - High
Resistance 2 (R2) = PP + (Resistance 1 - Support 1)
Support 2 (S2) = PP - (Resistance 1 - Support 1)
To calculate pivot points you need a trading period high, low, and close. This is true whether you are finding pivots for a daily, weekly or monthly chart. Since the FOREX market is technically a 24 hour market, there is some indecision as to WHAT time should be considered the "close". You'll find that traders who use pivot points in certain markets have their preferences and even have alternative pivot calculations, but most consider 4PM ET to be the close when trading a market like the $EUR-USD.
Many charting packages include pivots, and you can even find daily pivots from some websites for the markets you want to trade, so this will most likely be a minor issue unless you are calculating pivot points yourself.
Happy Trading!
Mark
Add to this Answer
Ask a Question
|
|
