Everybody has heard of pivot points (if you don’t know what pivot points are get in touch!) and there are a million different ways to use them. A lot of traders use pivot points in conjunction with indicators. But I have found a simple technique for exploiting the magnetic effect of pivot points.

Are you ready? This strategy is so simple it might scare off some people. Here goes…

1. First determine the overall trend using a 240 minute chart.
2. Switch to a lower timeframe of choice – for me 13 minute or 5 minute
3. Plot daily Pivot Points
4. In a down trend, enter short when price reaches R1 and expect price to drop to at least S1 and most likely S2
5. In an up trend, enter long when price hits S1 and expect price to reach R1 and probably R2

That’s it! Simple as pie and when combined with your money management it should equal a low risk yet profitable trading strategy.

Below I’ve include a chart of NZDUSD from this morning to demonstrate. I know from looking at a 240 minute chart that the trend is down. All I have to do is patiently wait for the price action to drive the price up to R1.

For this particular trade I entered at .7083 with a 10 pip stop (.7093)