How to Trade with Pivot Points
Pivot points are basically calculated based on the high, low, and close of the last trading session. There are seven pivot levels present on the chart, basic pivot level, Resistance 1, Resistance 2, Resistance 3, support 1, support 2, and support 3.
To start a pivot point breakout trade, you should open a position using a stop-limit order when the price breaks through a pivot point level. When there is a bearish breakout, you should start a short-trade; in the case of a bullish breakout, the trade should be kept long.
While trading pivot point breakouts, you should always use a stop-loss. Your stop-loss should be a point that is located somewhere before the breakout. This will make your trade secure against the unexpected price moves. The pivot point breakout should be held until the price action reaches the next pivot level.
Another pivot point trading is pivot point bounce trading. In such trading, if the currency is testing a pivot line from the upper side, then you should buy. When the price is testing a pivot line from the lower side, then a trader should short.