Pivot Calculator

Pivot Point Calculator

How to calculate Pivot points?

Pivot levels are derived from previous day High, Low and Close price values. Thus, every new day Pivot points must be reset using the newest data. As a rule traders take the time range from midnight to midnight, e.g. from midnight price bar to midnight bar.
Later we will introduce some traders' tricks about the timing.

Pivot points study provides traders with 5 major levels:

R2 — Second Resistance
R1 — First Resistance
PP — Pivot Point
S1 — First Support
S2 — Second Support

There are also additional levels, such as R3, S3 — third resistance and support, as well as Mid-points — middle levels between the major levels.

There are no limits on how many Pivot levels to use, however, one should remember, that making complex charts makes trading complicated as well. We would suggest sticking to 5 major Pivot point levels, around which most of the price action takes place.

The formula for calculating Pivot points is next:

Major 5 levels:

R2 = Pivot + (High — Low)        (same as R2 = Pivot + (R1 — S1))
R1 = 2 * Pivot — Low
Pivot = (High + Close + Low) / 3
S1 = 2 * Pivot — High

S2 = Pivot — (High — Low)      (same as S2 = Pivot — (R1 — S1))

Additional levels:

R3 = High + 2 * (Pivot — Low)
S3 = Low — 2 * (High — Pivot)
Midpoint between R1 and R2 = R1 + (R2 — R1) / 2
Midpoint between Pivot Point and R1 = Pivot + (R1 — Pivot) / 2

What is lot size and what's the risk?

Currencies in Forex are traded in Lots.
A standard lot size is 100 000 units.
Units refer to the base currency being traded. For example, with USD/CHF the base currency is US dollar, therefore if to trade 1 standard lot of USD/CHF it would be worth $100 000.
Another example: GBP/USD, here the base currency is British Pound(GBP), a standard lot for GBP/USD pair will be worth £100 000.

There are three types of lots (by size):

Standard lots = 100 000 units
Mini lots = 10 000 units
and micro lots = 1000 units.

Mini and micro lots are offered to traders who open mini accounts (on average from $200 to $1000). Standard lot sizes can be traded with larger accounts only (the requirements for a size of standard account vary from broker to broker).

The smaller the lots size traded, the lower will be profits, but also the lower will be losses.

When traders talk about losses, they also use term "risks". Because trading in Forex is as much about losing money as about making money.
Risks in Forex refer to the possibility of losing entire investment while trading. Trading Forex is known as one of the riskiest capital investments.

Returning back to lots:

With every Standard lot traded (100 000 units) a trader risks to lose (or looks to win) $10 per pip. Where Pip is the smallest price increment in the last digit in the rate (e.g. the smallest price change/move).

With every Mini lot traded (10 000 units) a trader risks to lose (or looks to win) $1 per pip.

With each micro lot (1000 units) - $0.10 per pip.

In Forex traders always search for the most efficient ways to limit risks or at least lessen risk effects. For this purpose various risk management and money management strategies are created.

It is impossible to avoid risks in Forex trading. In order to limit risks traders use methods of setting protective stops, trailing stops; use hedging techniques, study scalping strategies, look for the best deals on spreads among brokers etc.

Traders with the best risk management strategy earn the largest profits in Forex.

How to Use Forex Indicators to Avoid Fakeouts

Any trader which has experience with trading price action has been burnt at least once by a fakeout. Fakeout is a fake breakout – meaning that price breaks a limit (support or resistance level), just to come back to its original direction. Any traders who have entered the trade at the breakout end up losing money.
We can use various Forex indicators to avoid and spot fakeouts hours before they occur. This way you save precious pips from being wasted trading those traps.

The first Forex indicator that can be used to avoid fakeouts is the volume indicator. The volume towards a breakout should be rising and in an uptrend. Take a look at the volume before the breakout, if it is not rising it is a sign that the breakout is not real and may very well turn out to be a fakeout

Another indicator that we will use to see if a breakout is real is the Momentum Indicator. The momentum indicator gives us great insight regarding the velocity of price and its trend. We will take a look at the momentum of price and if it is rising it will be a sign that the breakout is real.
If the momentum is not rising or it is negative it is a sign that the breakout is not real.

We will also look at divergence between the momentum and the price. If momentum creates a divergence opposite to the trend of the breakout it is a bad sign that the breakout will not occur, and if it break – it will be a fake one.
Last indicator we will take a look at is the Simple Moving Average of 20-period. If it is not trending (flat) it is a sign that the trend is not strong and a range is likely to take place. On the other hand, if it trends strongly and its angel is strong it is a sign that the trend is strong and a real breakout is about to take place.

The angle of the SMA is similar in its calculation to the Momentum indicator, so their results can be similar. We recommend using several indicators in your analysis so you confirm the trades from several angles and your signals will be more accurate.
Generally, we will avoid trading breakouts as they are highly unreliable and can get you a lot of failed entries. If you want to maximize your profits, trade only the pullbacks and you will get much more accurate entry points that has much higher win rate. The win rate of pullbacks is about 30% higher than the regular breakout one.

Stochastics Indicator

The stochastics indicator is one of the oldest analytical tools in the market today. It was introduced in the 50s by George C. Lane, and has been popular ever since with both novice and experienced traders. It's great advantage is its simplicity. It's very easy to plot and evaluate it, and while it's just as prone to generating false signals as any other indicator, the vast amount of analysis and study available means that its behavior is better understood by traders and analysts.

On a chart, the stochastics indicator looks like this:

              
Note: Past performance is not indicative of future results.

In the above chart, the faster %K component is depicted in blue, while the slower %D component is shown in red. And now we'll discuss how to interpret and calculate these components.

Calculation of the Stochastics Indicator

The stochastics indicator is composed of two parts. The %K component is an oscialltor itself, and it is usually provided separately as the Williams Oscillator in most trading software packages. Let's first see how it is calculated, although we'll discuss it separately under its own heading.

%K = 100 x ( Recent Close - Lowest Low )/( Highest High- Lowest Low)

Here the highest high, the lowest low, indicate the values created during the entire timeframe on which the indicator is being applied.

The %K component tells us where the most recent range falls with respect to the maximum registered in the timeframe of our analysis. For example, if the most recent range is 50 pips, while the largest range is 100, the value of the component would be 100 x (50/100) = 50, which would mean that the latest range is in the 50 percentile of the maximum value in the analysis period.

The %D component is the 3-period MA of  %K. Both are plotted on the chart to help us derive signals. The MA can be a simple, or an exponential moving average depending on the desired degree of sensitivity to the latest market action.

The two types of slow and fast stochastics indicators both depend on the same principles, with the difference between them being that the slow stochastics indicator applies a longer period moving average to the %K component in order to smooth out crossovers and indicator volatility. The slow stochastics indicator is usually more reliable, although it emits a smaller number of trade signals.

Trading with Stochastics Indicator

The stochastics indicator is for the most part a range pattern indicator. It is used to determine overbought/oversold levels in a manner similar to the RSI. The oversold level is at 20, while the overbought level resides at 80. Although this is the most basic way of using this indicator, it is in fact rarely used because of the tendency to create false signals. Instead, as with most other oscilators, convergence/divergence patterns are sought between the price and the indicator, and then trading decisions are made sometimes supported by secondary concepts like the price extremes, or crossovers that can sometimes signal momentum changes.

Both for the fast and slow stochastics indicators, indicator crossovers are used to create trade signals on the basis of the movement of the %K component. The %K component is the faster moving of the two components, and when it rises above, or falls below the slower %D, a buy or sell signal will be generated.

Accessibility

Stochastics oscillator is available with just about any trading software in the market, since it is a part of the most basic technical analysis toolbox. All the major platforms provided by MGForex, Easy-Forex, ForexYard make this indicator available.

Conclusion

What is the best way of using the stochastics indicator? In a ranging marker, with a relatively calm trading environment, traders can use simple crossovers or overbought/oversold levels in formulating their trading strategies. In more complicated market conditions, it is probably the best choice to seek the divergence/convergence phenomenon, and to confirm with volatility indicators, or moving averages to pick only the most reliable configurations. You can, for example, choose a less volatile, ranging market as determined by the Bollinger Bands, or the ATR, for trading with the Stochastics indicator in trendless market conditions.

It is not a good idea to use the stochastics indicator in strongly trading markets, especially if you depend on overbought/oversold levels for trade decisions. Trending markets can be brutal in the way they breach these limits, and it simply is not worth the risk to try to test them with range indicators .

What are the best bargain investments right now?

I like the DIA (ETF for the Dow Jones),
I like UNG (ETF for Natural Gas),
I like real estate in Detroit because prices are very low and foreclosures abound.
Regarding Education I like degrees in medical billing because they take only 1 year to get and they are in demand.
I like to invest in small businesses like gas stores and one dollar stores because everybody uses them.
I don’t like single stocks because of lack of diversification.
I don’t like forex market because I am not a trader.
I don’t like options because they are too risky and complex.
I don’t like silver and gold because the price is too high.
Do you know better investments?

Best answer:

Answer by Bleeding Tiger
I really like the DIA, i agree it has to go up from here.

I also really like the FAZ its another etf

Add your own answer in the comments!

Pennant Chart Definition

A pennant chart formation occurs after a security experiences an impulsive up or down move. After such a strong run-up, the security will take a "breather" before continuing in the direction of the primary trend. This breather resembles a symmetrical triangle, where two trendlines converge to a point, hence the term "pennant". While inside the pennant, there are a number of minor price fluctuations that occur on light volume. After this quiet period, the security will eventually erupt out of this consolidation zone with an increase in price and volume. The breakout from the pennant chart pattern will often times be equivalent to the impulsive move prior to entering the symmetrical triangle. The pennant chart formation is one of the more reliable continuation patterns.

Pennant Chart Example