Forex Pivot Points

DEFINITION of 'Forex Pivot Points'

A set of indicators developed by floor traders in the commodities markets to determine potential turning points, also known as "pivots". Forex pivot points are calculated to determine levels in which the sentiment of the market could change from "bullish" to "bearish." Currency traders see pivot points as markers of support and resistance.

Forex pivot points are calculated as the average of the high, low and close from the previous trading session:

Forex Pivot Point = (High + Low + Close) / 3


BREAKING DOWN 'Forex Pivot Points'

Because pivot points are thought to work well in very liquid markets, the spot forex market may be the perfect place to use them. Day traders use the calculated pivot points to determine levels of entry, stops and profit taking by trying to determine where the majority of other traders may be doing the same. Forex pivot point calculators are available free of charge across the internet through retail forex brokers and third-party websites.

RELATED TERMS
  1. Forex Forecasting Software

    An analytical tool used to help currency traders with forex trading ...
  2. Ascending Channel

    An ascending channel is the price action contained between upward ...
  3. Liquidation Level

    In forex trading, the specific value of a trader's account below ...
  4. Forex Market

    The market in which participants are able to buy, sell, exchange ...
  5. Forex Analysis

    An examination of the changes in the forex market that are used ...
  6. Forex Hedge

    A transaction implemented by a forex trader to protect an existing ...
Related Articles
  1. Trading

    Pivot Traders

    Pivot traders basically say that the exact value (or price of a stock) at any given time is unknowable. You cannot say that your stock is worth $100 because there are too many variables to contend ...
  2. Trading

    Price Pivots Circle Big Profits

    Reading pivots will help you spot trends and use them to your advantage.
  3. Trading

    Using Pivot Points In Forex Trading

    Learn to combine this powerful tool with traditional technical tools for greater returns.
  4. Trading

    Gauging The Strength Of A Market Move

    Learn how to apply the ACD technique to a longer time horizon.
  5. Trading

    10 Ways To Avoid Losing Money In Forex

    When approached as a business, forex trading can be profitable and rewarding. Find out what you need to do to avoid big losses as a beginner.
  6. Trading

    Guide To Smartphone Forex Apps: Forex Education, Signaling And Other Apps

    From discussion forums to how-to articles, educational forex apps can provide traders with an easy-to-access way to learn more when on-the-go. Forex traders can use these resources to learn everything ...
  7. Trading

    Forex Broker Guide: Conclusion

    If a trader has confidence in a forex broker, he or she will be able to devote more time and attention to analysis and developing forex strategies. A bit of research before committing to a broker ...
  8. Investing

    April 19 2013 Market Summary

    The U.S. markets moved sharply lower this week led by small-cap and technology stocks, with large caps performing considerably better on the whole. With the Conference Board’s index of ...
  9. Trading

    The Forex Market: Who Trades Currency And Why

    The forex market has a lot of unique attributes that may come as a surprise for new traders.
  10. Trading

    What Is A Pip?

    Learn how this measure of change is used in trading currencies on the forex market.
RELATED FAQS
  1. How do I calculate forex pivot points?

    Pivot points were originally developed by floor traders in the equity and commodity exchanges. They are calculated based ... Read Answer >>
  2. What is the difference between forex Pivot Points and forex Levels of Support & resistance?

    Understand the differences between pivot points and levels of support/resistance in an asset's price movements, both in and ... Read Answer >>
  3. What are the most common market indicators forex traders follow?

    Learn the most common technical indicators that forex traders and currency market analysts utilize to predict likely market ... Read Answer >>
  4. What are the best ways to identify Retracements on a stock?

    Read about three of the most common methods for identifying retracement levels on a stock's price chart, including the controversial ... Read Answer >>
  5. In the forex market, how is the closing price of a currency pair determined?

    The foreign exchange market, or forex, is the market in which the currencies of the world are traded by governments, banks, ... Read Answer >>
  6. How do I use the Dynamic Momentum Index for creating a forex trading strategy?

    Create a forex trading strategy designed to take advantage of the ability of the dynamic momentum index to give early signals ... Read Answer >>
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center