What is pivot trading?

<p id="isPasted">Pivot trading is a strategy used by traders to predict where prices might go in financial markets, like the forex market. Imagine you're on a seesaw: there's a point in the middle where it balances. In trading, this balancing point is called the "pivot point." It's calculated using the average of the highest, lowest, and closing prices from the previous day.</p><p>Once we have this pivot point, we can draw lines above and below it. These lines are like hurdles or floors for the price. If the price is going up and reaches one of these lines, it might slow down or turn around because it's like hitting a ceiling. On the other hand, if the price is dropping and hits one of the lines below, it could bounce back up because it's like touching the ground.</p><p>Traders use these lines to make decisions. If the price is getting close to a line below, they might think about buying because the price could bounce up. If it's getting close to a line above, they might consider selling because it might come down. This strategy helps traders plan when to enter a trade when to get out, and where to set their targets.</p>

<p id="isPasted">Pivot points are a technical indicator that traders use to predict upcoming areas of technical significance, such as support and resistance. They're calculated by averaging the high, low, and closing prices of a previous period. That could be a day, a week, or a month.</p><p>If a market is trading above its previous pivot point (known as P), it is seen as a bullish signal. If it is below, it is bearish.</p><p>Day traders often use this as a method of spotting short-term trends. For instance, if EUR/USD is trading above P from the previous day, they may decide that it will continue to climb – and look to buy the pair.</p>