Pivot Points

Pivot points are turning points in price movements. They are places where buyers or seller give up their positions, so they involve emotions. The more intense the emotions are, the more important the pivot points. At extreme cases, one pivot point, such as price spike or crash, might define the turning point for a secure long term trend. Most of cases, more than one pivot points connect to a trend line. The break of a trend line may decide the direction of a trend.

So pivot points and trend lines are important tools to use to decide the entry and exit of a trade. Here are three steps that Jesse Livemore used to enter his trades.

1. Watch the tape.


2. Establish your pivot points.


3. Be ready to trade along the line of least resistance.

Pivot points are easy to see in hindsight but difficult to spot when they are developing. It is even hard if you like to have information from media and your mind is strongly biased.

Keep your mind open, clear and objective, then pivot points and lines of least resistance come to you. you go with the flow.

Below are some charts with clear pivot points and lines of least resistacne. I feel disappointed I find them in hindsight but not they come to me natually.

Japanese Yen



Australian Dollar



Canadian Dollar

Dollar and Other Currencies

Last Friday, Dollar had a largest upside move in many years. It also broke out a six-month base. Other major currencies, such as, Euro, Australian Dollar, Canadian Dollar, British Pound, Swiss Franc had the largest one-day drops within years.

Dollar Index



Euro

Cut Loss Short and Fast

In trading, cut loss short and fast is one of principles to achieve consistent and profitable results. Following this principle is one of the common attributes of successful traders, though, they might implement it in different ways.

Here are my understandings of this principle and I like to follow them consistently in my trading.

• Always have a stop loss in place.
• In a trading session, I enter a position but I have a loss around the close of the session. I close the position.
• After I enter a position, I have profits for a while. Then the market stalls, goes again me, and gives me a loss. I close the position.

It seems that traders have tendency to let loss run. They are unwilling to experience feelings of loss. They hope the market can come back to their way again.

The Postive Intentions of Failure and Loss

Failure and Loss normally bring people negative feelings, such as pain, anger, frustration, and so on. People also are unwilling to experience those feelings, so they regard failure and loss bad and try to avoid them.

But negative feelings of failure and loss have positive intentions:

• They tell us that something is not working or doesn't function properly any more, let it go.
• We might be able to learn something from our mistakes that cause the failure and loss.
• We might study more in the areas that we are undertaking.
• Others.

Failure and Loss are the part of a process. We might embrace them. Willingness to experience feelings of failure and loss gives us the courage to trial and error and can help us to learn from failures and to grow. A Chinese saying that I like:

Failure is the mother of Success

Refllatio

Source: London Banker