A pivot point is a turning point/condition. In the Forex market, it is the level in which the sentiment of the market changes. If the market breaks this level up, then the sentiment is said to be an uptrend or a bull market and this condition is likely to continue. Now, if the market breaks this level down, then the sentiment is bear, and expected to continue its way down. It is also in this level that the market is expected to have some kind of support/resistance and if price can't break the pivot point, there might be a possible bounce from it.
if you can picture a graph her illustration will become more concrete. on this graph you need to picture a high and a low point on the Y-axis. if the trend (or that line you draw between charted points, following the x-axis) goes above your high point, she says that the market will tend to continue going up. its like once the market hits that high, interia will carry it further for a predictable amount of time. similarly, if the trend goes below your low point, she says the market will likely continue to be bearish (under-perform) for a while. as far as "bounce" is concerned, if the market performance cannot reach your high or low points, it is likely that there is a market influence that is perhaps unseen, or difficult to predict, which will bolster whatever move the market makes next. to mitigate this risk, it is always adviseable to set your limits prior to trading. decide which gains and losses are acceptable and even put a cap on gains, so that you automatically sell when you've realized a certain gain.
Money management is important in trading and in gambling, and in anything that concerns investing and spending money. This is limiting and controling yourself from spending more as the natural reaction is that one tends to spend more and more no matter what the result was, be it that you won or gained or lost... there is still a tendency to spend for various reasons.
Pivot point is the middle point between the higher and lower price, we can drawing pivot point using fibonacci tool on MT4 platform, the main function of pivot point is same as support/resistance point.
As regards to Masterforex-V New Technical Analysis:
A completely new approach to pivot points is used:
Essence of MF Pivot – apex of the first sub-wave in the current wave, which when crossed means the end of current wave, as well as the end of higher level waves. It is a completely new, unique and revolutionary element of Wave Analysis. It is a start point or point of reference of any new same level wave in an unidirectional movement. Correctly identified MF Pivot helps to see the whole structure of any wave formation, as well as helps to understand which part of that formation is ended and what further movement variations are still possible
MF Pivot often is called a “Key of Wave Analysis”. This is not an overstatement. MF pivot helps to identify in real-time, for example when the m5 wave becomes an m15 wave; when can the price movement direction start to change; when the current wave is finished. As you understand, all these MF Pivot features are very important for a trader, who wants to understand, what he should do now, in the current moment.
How exactly can MF pivot help in actual practical trading ?:
- MF pivot tells me EXACTLY when and where is the market changing from "Trend-phase" to "Flat phase".
- With help of MF pivot I can identify in "real-time mode" when did the trend stop and it is time to move from "trend-strategy" to "flat-strategy"