To enter a pivot point breakout trade, one should open a position using a stop limit order when the price breaks through a pivot point level. These breakouts will mostly occur in the morning. If the breakout is bearish, then the trader should initiate a short trade. If the breakout is bullish, then the trade should be long.
One should always use a stop loss when trading pivot point breakouts. A good place for the trader’s stop would be a top or bottom which is located somewhere before the breakout. This way the trade will always be secured against unexpected price moves.
There are few basic rules when trading pivot points:
- Be bearish when the worth is below the most pivot point.
- Be bullish when the worth is above the most pivot point.
- Go long if the worth bounces from S1, S2, or S3.
- Go short if the worth bounces from R1, R2, or R3.
S1 is Support 1, S2 is Support 2 and S3 is Support 3
R1 is Resistance 1, R2 is Resistance 2 and R3 is Resistance 3