I think you’re right, Thanks
This is really good advice. It’s all probabilities. Risk management is really hard to get right. But how do you build the win rate part? .Should I demo first for so many trades , like 100 or 1000, to figure that out first and then apply it to a live strategy? Or do you figure that out along the way?
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You are certainly right that optimising risk management is a real challenge, especially on lower timeframes.
Backtesting can be an effective tool if you have an entirely mechanical system but with a discretionary method it is almost impossible to back test and recreate the same conditions that one would have considered in real-time. But it can offer some kind of indication.
Personally, I think it is better to monitor and analyse as you go and that is where good journalling is so helpful. A journal is not just a record of trades taken, it should also include all relevant info concerning the trade decision as well as how thetrade could have worked better.
For example, if one targets 25 pips it is also worth noting the max no. of pips that the move actually made and the max no. of pips in drawdown during the trade. This kind of info can give a lot of insight into what are the typical move extent and duration for the instrument and timeframe being traded. This can help in setting your trade parameters.
But there are a number of things that one can think about in general commonsense terms as well. For example, it is worth always only looking for a modest portion of any particular move. E.g. getting 10 pips on 90% of trades compared with seeking 110 pips and only getting it right once every 10 trades, etc.
R:R is another area where commonsense plays a role, and is really an issue of compromise. E.g. if one looks for only 10 pips profit should the SL also be only 10 pips? It might minimise losses per trade but increases the risk of being frequently stopped out purely from market “noise” as the move unfolds.
Another feature is entry point decision. Does one enter at market when a signal is given? Or place an order closer to the defined stop level to improve the ratios?
As you say, it is not easy… 
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Combining pivot points with other technical tools like support and resistance levels, moving averages, and candlestick patterns may be useful too. For example, using moving averages can help confirm the trend direction, while candlestick patterns like engulfing or Doji near pivot levels can indicate potential reversals.
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Pivot points can definitely work as an effective tool, especially for identifying potential support and resistance levels. They’re widely used by traders to gauge market sentiment and spot potential price reversals.
Pivot points are calculated based on the previous day’s high, low, and closing prices. From there, you get a central pivot level, along with support (S1, S2, S3) and resistance levels (R1, R2, R3) above and below. Here’s how they can be useful:
- Support and Resistance: The pivot point itself acts as a key level, and those additional levels often serve as potential turning points in the market.
- Trend Indicator: When the price is above the pivot point, it’s considered a bullish signal; when below, it’s bearish.
- Reversals or Breakouts: If the price approaches one of the support or resistance levels, it might either bounce back or break through, depending on market strength.
That being said, pivot points work best in combination with other indicators like moving averages or trend lines. They’re not a magic formula but can definitely enhance your overall strategy. Have you tried using them alongside other indicators?
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I used to use fixed SLs. At the start. And when combined with a strategy that’s not really a strategy, the loses added up and your demo account size goes down. The noise got me every time. Well, that and not knowing what I was doing.
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Yes, that is correct.
Yes Pivot points definitely works. It’s an Indicator for day traders particularly and tells us about trends and reversals in forex, commodity market.
They are support and resistance
Hi @mrhenry8th, just want to share opinion while monitoring XAU, EURUSD and USDCAD 
I still remember how I used Pivot Point (PP) back then in year 2002. We had limited access to market data. Computer was expensive, charting software was limited. I was then have to use Pivot Point. 
Reason was, I couldnt see SnR. But I could see previous candlestick (OHLC). This was the reason PP was handy. Early in the morning, I only needed to get last OHLC, made some calculation to get the pivots, then I had something to monitored price movement.
Nowadays, we can access market data easily. We can see SnR, alive, so PP becomes pretty much ineffective. But when you move the chart on higher TF, PP can be still applicable. I guess the reason is higher TF is harder to analyze.
The same thing to CFD, I find out, PP can also be used on higher TF. For example, many trade XAU by looking at weekly PP. It helps to give us market insight, but there are many other superior methods.
The reason on why PP works, is similar with fibonacci. It’s a believe system. Every method will work when we combine with proper money and risk management. 
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New point of view! Thanks for the history lesson! I imagine lots of tools used in early days of stock trading have naturally made their way to currency trading and are used it kind. And why not
Thanks.
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I’ve found pivot points to be pretty helpful in my trading journey! They provide potential support and resistance levels based on past price action, and since many traders pay attention to them, they can really influence market behavior. If the price is above the pivot point, it usually indicates a bullish trend, while below suggests a bearish one. They’re not perfect, but I like to use them alongside other indicators to get a better understanding of the market!
Curious to know how do you guys try to approach pivot point clusters when overlapping with let’s say, Fibonacci levels or key moving averages?
Hi @Andrew_100, it’s simple by observing how the instrument moves according to indicator.
Example EURUSD and GBPUSD react to PP, considerable good. Fibonacci isn’t.
Most instrument when it obeys PP, it wont tolerate major Fibonacci’s level.
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@TYGMedia Thanks for sharing the images. I guess that different pairs respond better to certain indicators and like you shared here, when a pair sticks to pivot points, it can ignore major Fibonacci levels. Do you think PP works better for most pairs?
I have small objections to using pivot points, and also some other TA features -
pivot points are useful because they work, but nobody can completely rationalise why with reference to the core “constants” of TA
pivot points appear to have influence over subsequent price action, which is odd because they can only be seen if you go looking for them - doubtless pivot points are a minority interest, so how much influence can they really claim across any market?
I’m going to offer a simple alternative to pivot points - outside key reversals.
On your preferred time-frame, find the next bar with a higher high and lower low than the preceding bar’s, and with its close also above or below that range. Wait for a close of a subsequent bar above or below the outside bar. Depending whether that was above or below you now have the statisically probable direction for subsequent price action, using the outside bar’s extremes as support and resistance. Obviously, the opposite extreme of the bar also now offers a position for a stop-loss.
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Hi @Andrew_100, most PP works on major pair but not all. I won’t use PP for trading, but we can use it for prediction on higher TF such as daily or weekly.
Different pair will response different indicator. You have to observe them one by one.
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When pivot point clusters line up with Fibonacci levels or moving averages, it’s a strong sign of support or resistance. I wait for price action or volume confirmation before entering, and always manage risk with tight stops.
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