Lesson 4
Pivot Points
Those of you who have been trading for a while will be familiar with Pivot Points. During this lesson I want to go over how to find a Pivot Point and also a slightly different method of using them. First lets look at how you calculate a Pivot Point.
Using a bar chart you will observe that each bar has an Open, High, Low and Close. This information represents all price activity during that particular period. In the case of the following example we shall use a daily bar. To calculate the pivot point all you need to do is add the High, Low and Close. Once this has been done you next divide the total by three e.g. The cash FTSE on the 2nd May 02 had a High of 5192.70 a low of 5125.50 and a close of 5174.10 If you add the three together you get 15492.3. You then divide that total by three to get a Pivot Point of 5164.10.【交易知识macd.org.cn收集整理】
OK, so far so good, but what do you do with this information. Well, one technique I like to use intraday is to use the pivot point as a trend indicator. We already know that the Pivot Point for the 2nd May was 5164.10 and we will use this the next day as an intraday trend indicator. If the price is above 5164.10 then I would only be long and if it were below 5164.10 I would only be short.
As price can fluctuate around any given point I also add a further proviso. If I have support close to 5164.10 I will first wait for the price to pass through 5164.10 and support before entering short. If I have resistance close 5164.10 I will first wait for the price to move through the Pivot Point and resistance before entering long. This method becomes even more powerful when the Pivot Point is close to the opening price. If for example the opening price is 5174.10, the Pivot Point is 5164.10 and I eventually go short at 5155 I can stay short the whole day as long as it does not go above the Pivot Point. Once in a position I normally have a very tight stop to begin with and then will follow the market with a trailing stop to lock in profits.
Another way I like to add Pivot Points to my analysis is for more long-term projections. I will use the Pivot Point of a Yearly, Monthly and Weekly chart. In this case it would be the High, Low and Close of the previous Year, Month and Week. I like to think of the weekly Pivot Point as the short-term trend, the monthly as the medium term trend and the Yearly as the long-term trend. I find this particularly useful in Spot Forex. If I am below the yearly, monthly and weekly Pivot Point I know I am in a strong down trend and I can scale into multiple positions over time. The same holds true for long positions.
The point is there are many ways to determine trend. You can also use Pivot Point to find potential Support and Resistance which we will cover in later lessons. Experiment with Pivot Points and see if it suits your trading style. At the very least it is always handy to know where they are and it may help you decide which side of the market you should be trading from.
Lesson 5
Moving Average Convergence-Divergence (MACD)
History
Moving Average Convergence-Divergence (MACD) was originally constructed by Gerald Appel an analyst in New York. Originally designed for analysis of stock trends, it is now widely used in many markets. MACD is constructed by making an average of the difference between two moving averages. The difference of the original two moving averages and the moving average of the difference can be plotted as two lines, one fast and one slow.
Uses
Most modern charting software now includes MACD as standard. Once selected to display in your charting software it normally shows up as two lines plotted on an open scale against the zero line. These two lines will normally be of different color or one line a solid line and the other a dotted line. Frequently used settings are 12 and 26 period exponential moving averages with 9 period exponential moving average as the signal line. Although there are three moving averages mentioned you will only see two lines.The simplest method of use is when the two lines cross. If the faster signal line crosses above the slower line then a buy signal is generated and vice versa. It is also used as an overbought and oversold indicator. The higher above the zero both lines are the more overbought it becomes and the lower below the zero line both lines are the more oversold it becomes.【交易知识macd.org.cn收集整理】
It may also lead to a stronger signal if the signal line crosses down when it is overbought and crosses up when it is oversold. The last common use of MACD is that of divergence. If the MACD is making new lows and the price of the security is not making new lows that is one form of divergence. Also, if the MACD has made a low and starts back up but price continues to fall that is another type of divergence(bearish divergence)and may lead to an indication of change in direction. The same applies to bullish diversion.
My Own Use Of MACD
I like to use the MACD as a trend indicator with parameters set at 8 and 18 period exponential moving averages with a 9 period exponential moving average as the signal line. All I am trying to do is establish a trend in a higher time period than the one I intend to trade. If you were trading day charts you would be looking at the MACD on the weekly.As long as the signal line remains above or below the MACD line you know the trend is still in place. As you can see from the chart examples of the 30 min Cash DJIA there was a sell signal on the 9th May 02. This way my higher time frame as I was trading intraday. I then went to the 5 min chart of the Cash DJIA and sold the rallies, confident to stay short as long as my higher time period MACD trend in the 30 min stayed intact. If the 30 min MACD signal line were to cross up I would have closed all short positions.
30 Min Cash DJIA 
