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Pivot Points are an incredibly useful online forex trading technique. A recent trade of mine yielded a 126 pip profit in only 50 hours, which grew my entire trading account by 10.04%, which is exceptional for 20-30 minutes worth of work!
Why Forex Pivot Points?
Pivot Points are one of the most commonly used methods of online forex trading. The pivot point takes the High, Low, & Close prices from yesterday and generates Support & Resistance target prices.
Forex Pivot Points are uncannily accurate when combined with the right directional entry strategy. In the example below you’ll notice the predictive nature of forex pivot points for online forex trading success.
Spotting Trend Direction
In the Forex Sailing course I explain the fibonacci wave theory for determining trend direction. In a recent post, I also explained EMA/MACD divergence for signaling key trend movements.
While the trade below could have been an excellent Sail, it also would have required a stop of several hundred pips, which would have violated the money management system followed by the LIVE Forex Training class.
For this reason, I used pivot points to capture a shorter term profit of 126 pips in 2 days. Here’s how the trade unfolded.
EUR/USD Daily Trend Moves Down
From Forex Sailing we had a forex umbrella handle form after breaking a longer uptrend on the daily chart for the EUR/USD. I’ve labeled the fibonacci wave with the key points of I, II, II on the daily chart below:
In the chart shot above notice how there is good separation of the EMAs and how the MACD is increasingly negative as prices make new lows. This is a strong signal that prices will continue moving down for several days. We also moved past II, which means we should move to a lower low to reach IV.
To confirm this direction I also looked at smaller timeframes, which lined up nicely as well to indicate downward movement. As indicated on this 4 hour chart below:
In this chart we also had nice EMA separation, and an increasingly negative MACD. While there was a fair amount of divergence, the trend direction was still downward. But a large enough stop was needed to make sure the divergence didn’t retrace too much before the trend continued.
The 15 min chart below also indicated a downward moving trend:
As newer lows were made we maintained a widening of the EMA, we also maintained strong negative MACD divergence as new lows were made.
Downtrend Confirmed -> Let’s Trade
With a downtrend confirmed on these timeframes, it was time to look at our pivot points for good stop/limit prices. For the entry price I used a price close to the pivot and found a EMA/MACD divergence on a 5 min chart.
Initially I set the following trade parameters:
Entry: 1.3397 short
This gave us a good reward/risk ratio of 82%. We were below the pivot price of 1.3453, so the stop was less likely to be hit than our limit. This initial trade would have netted 123 pips profit.
24 Hour Adjustment
The next day the pivot points were recalculated because the trade was still in progress.
Entry: 1.3397 short
This reduced our risk to only 14 pips, and increased our profit 3 pips from 123 to 126 pips. The next day the trade was exited for a profit. Here’s the picture of what happened during the life of this trade on the hourly chart:
You can see the entry price of 1.3397 (red line). You can see the price at which the limit was hit 50 hours later at 1.3271 (blue line). The stop isn’t included on this chart because that price was never approached
As you can see the price consolidated a bit, but moved downward overall. We managed to get in near the top of this price movement and captured a 126 pip profit in only 50 hours.
If you’re interested in successful online forex trading, there’s a reason why you’re not successful trading yet…
Forex trading takes some BALLS!
It’s definitely not an endeavor for sissies. That’s right! In order to succeed at online forex trading, you constantly have to take risks…
You’ve probably heard your whole life not to take risks by some of the people closest to you. Just because you’ve heard this from people that care about you, doesn’t mean it’s completely accurate…
The Truth About Risk
It’s absolutely true that whatever you risk as your stop on a forex trade is money that you can LOSE! If the trade goes against you, you lose that money forever. It’ll never come back…
So you’d think that risking money over and over again is bad, right?
Actually risking a smaller amount of money more times is “less risky” over all.
This is because every time you “risk” money on a trade, you have a chance of being right! So the goal is to play the game long enough to win. This is why forex money management is so important (here’s a free video that shows you how to do good forex money management).
Common Sense Example
What’s riskier? Risking your entire trading account on a single trade? Or Risking 1/20th of your account on a single trade?
The answer is obvious that it’s “safer” to only risk 1/20th of your account on a single trade!
What’s Stopping You?
If you’re not trading forex yet, it’s because you’re afraid of losing money. This is either due to a lack of knowledge, or a lack of confidence with the knowledge you have…
There’s an easy cure for this!
You need to start trading. There’s no way around it!
When you start trading:
- You’ll lose some money
- You’ll make some money
- You’ll get more confident as you learn more
- You’ll get better if you keep trying
- You’ll learn from mistakes
- You’ll become naturally curious about chart movements
- You’ll have new questions that you’ll seek answers to
The REAL Risk?
I don’t suggest for one minute that you risk money you can’t afford to lose. The truth is that you already waste money in various ways.
But don’t let losing a few hundred dollars to learn keep you out of the game. You can start trading with as little $200-$500! This isn’t a ton of money.
There’s an amazing market out there called the Foreign Exchange. It’s there for you to profit from 24 hours a day 5 days a week.
You’re so close to cashing in on it…What are you waiting for?
If you want to become a forex expert, you’re gonna have to grow some balls and take some risks…there’s no way around this fact…nothing ventured, nothing gained!
A common question I get is:
Why do you teach people how to trade? If you can really trade, why don’t you just spend your time trading and not bother teaching people?
Two Reasons Why I Teach Forex Trading
I teach forex trading online for two main reasons. The first reason is to fulfill my purpose in helping other people be successful. The second reason is that it helps me be a better trader.
I’ve actually written alot on this blog about fulfilling your purpose in life. In a recent post called “What’s the Point of Trading?” I mentioned that helping people is an important part of our purpose on this planet.
Since I’ve been fortunate enough to succeed at forex trading and have a background in teaching, teaching forex trading is a natural fulfillment of my purpose.
Do I Actually Trade?
YES!!! Absolutely! If I’m awake, my computer is on and the charts are on my screen. I don’t sit glued to the computer, but I do glance at the charts in between watching a movie, cooking a meal, or when I come back from the beach.
Not only do I trade, but I also share every single trade that I do with my forex class. My trading is the class!
I don’t place a trade every single day, but I do a few trades a week on average. My primary focus is on my own personal trading.
I had to figure alot of stuff out the hard way. This website is here to help YOU learn forex trading faster than you could possibly learn without it.
A little while ago I celebrated my 7th anniversary teaching forex trading online! I feel really good about my contribution to online forex trading, which was barely even an industry when I got started teaching it.
My Commitment to Trading
I spend more time trading when I’m committed to teaching forex online. Without this commitment, I would literally spend about 3 hours a week trading.
But since I am committed to sharing everything about trading with the forex class I teach, it also benefits me from doing more trades.
But it’s not just for my benefit. I teach forex trading online because I’ve personally invested close to $100,000 in forex training courses & seminars over the years. They all had the SAME problem…ALL THEORY & ZERO HELP!
I’m incredibly fortunate to work with a small group of students who really want to learn forex trading online on a serious level and get to make a real difference in people’s lives.
What Are You Going to Do with Success?
I also help people in ways that have nothing to do with forex trading… I personally believe that our highest purpose is in serving others once we can succeed for ourselves. I ask that you take whatever value you get out of this website & pay it forward to someone else by helping them with your talents, abilities and resources.