May 29, 2013

Does Pivot Point Trading Still Work In 2013?

With many of the forex pairs becoming a lot less volatile in 2013, many traders will be questioning whether day trading, and more specifically pivot point trading, is still a profitable way to trade.

This is a valid question because if you look at the average daily trading range of the major currency pairs (as measured by the ATR indicator), you will see that the average price movement per day is a lot less than it used to be a few years ago.

For instance the average daily trading range for the GBP/USD pair is currently 99 pips, whereas it has been over 200 pips in recent years (and a lot more than that in 2008 and 2009 after the banking crisis).

It is the same story with the EUR/USD pair because the average trading range is now just 90 pips, whereas it has often been in excess of 100 pips in previous years.

This lower volatility does undoubtedly make it slightly harder to generate profits on a daily basis because the price movements are not so big, but it is still possible to make some decent money, and pivot points are still very useful.

I myself still trade my early morning breakout system on the GBP/USD and EUR/USD pairs (as well as crude oil and the FTSE on occasions) whenever a really good set-up occurs, and pivot points play an important role here because I will often use them as natural exit points.

I am also aware that the most successful forex trader on Zulutrade (Newwave) uses a system based on pivot points and fibonacci levels.

You can read more about this trader by visiting the Zulutrade website, and clicking on Newwave in the performance table at the bottom of the page.

You will see that he has generated a total profit of 8017 pips this year (with a success rate of 80%) at the time of writing, and has over 4500 followers who are all trading his signals automatically in their own trading accounts using the free Zulutrade service.

So the point I want to get across is that taking positions around key pivot point levels can still be profitable in 2013 if they are used as part of a solid trading strategy.

 

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