If you’re familiar with the concepts of support and resistance, you may have heard of pivot points. Pivot points expand on the support and resistance theory, giving traders more important price areas to know about when they trade.

Most traders think that support and resistance simply represent just one price area each, but pivot points can give traders three support and three resistance levels to work with and this added information can indeed be quite profitable when you know how to apply it properly.

Pivot points are also useful because they can be applied in both trending and range-bound markets. Pivot points are frequently used by forex traders that like to scalp for small amounts of pips when a currency pair is stock in a tight range. These traders will execute lots of trades as a pair bounces back Levitra and forth in a 10-pip, or less, ranges. While this is a tough strategy to employ, all of those trades, when successful, can add up to a lot of pips.

How To Integrate A Forex Robot With Pivot Points

Forex robots and pivot points can prove to be a potent combination for traders that choose to program their forex robots to recognize these important price points. Pivot points are easily calculated. Simply take the high, low and closing price for a currency pair during a given period, add them up and then divide by three. Note that some users of pivot points will include the open price in this equation and then divide four, but stick with the equation that we recommended as it’s easier to use.

The number you come up with is the pivot point and this can be programmed into your forex robot. Then to get the first support area, you multiply the pivot point by two and subtract the session’s high. For the resistance price, you do the same thing, but subtract the session high. For the second support price, subtract the low from the high and then subtract that number from the pivot point. For the second resistance price add the pivot point to the number you get after subtracting the low from the high.
Your charting platform should do all the math for you and this can help your forex robot easily recognize these important trading areas.

Using Pivot Points With Your Forex Robot

If you program your forex robot to recognize pivot points, you are truly putting the odds in your favor and keeping risk to a minimum. In fact, programming your forex robot to recognize pivot points can help prevent over-trading and keep your forex robot generating pips even during choppy markets.

You should also use a forex robot that is especially good at identifying breakouts because pivot points can be used to trade breakouts. Use your forex robot to automatically take long trades just above resistance pivot points and initiate short trades right below support pivot points. As each pivot point is violated or surpassed, that signals the trend is getting stronger and that should help your forex robots generate more winners for you.

Author Bio: Francisco Pizarro G. made a career from Forex and left my profession as a Translator almost 4 years ago; since then I work from home in my small office trading the Asiatic markets during night time, where I found a good niche. I am a fan of Forex Robots

Category: Finances
Keywords: Forex Robots, Day Trading, Forex, Forex Brokers, Finacial Advisors, Expert Advisors