Before you use the Forex Pivot Point tool and what benefits you can get from this tool, you must know the definition of forex itself. Forex is a trade where you can make money from the difference in the value of each currency when you exchange it.
For example, if you are an American and want to visit Indonesia, all you need to do to travel around the country is to buy Rupiah, and how you exchange it through a money changer because the Rupiah is very cheap on that day.
For example, you can buy Rp. 13,000 with one dollar. In other words, when you exchange one currency with another, it is called participating in forex trading, and vice versa. The most popular forex market in the world is the NYSE (New York Stock Exchange).
Pivot Point Function
According to Investopedia, the pivot point is simply the average of the high, low and closing prices from the previous trading day. Forex traders and brokers must be smart in predicting the rate of increase and decrease in currencies and when is the best time to sell or buy currencies to get profit. Is it time to hold the currency you have or to release it?
Pivot Points can function as analytical indicators and then indicate the level of important technical consequences. If you use it in conjunction with other technical statistics, such as hold up or resistance, or often called Fibonacci, it will be an effective tool. Points are determined in the highs and lows and even prices of the closing days, weeks and even the previous month.
When is the best time to make money from forex?
When looking at the screen display of the exchange rates of each currency, you have to predict which will go down and which will be stronger and when is the best time to make money from forex.
To analyze the best moment in forex trading, then you have to see whether the last price is above the daily pivot point or not. If so, then you can use it as a BUY position indicator of your forex transactions.
If not, if the current price is below that, then it serves as an implication of the SELL position. While the support and resistance level can function as a time to get out of trading.
If the price reaches the pivot point, use R1 and R2 as targets. Although you can consider that there will be long positions if you see an indicator showing a trend reversal.
Read more: Beware of Suddenly Illusion of Trading
