As I was getting through the support section, I understood most of it.
But if you believe that a resistance line will hold the price back, don’t you lose when it breaks through if you’ve sold? Or are you constantly selling every time it gets near resistance and then when it passes through and shows momentum you buy again etc and vice versa for shorting? Many times it shoots dabbles around the support line and then rockets down… How do you compensate for this? Are support/resistance lines really the way to go? What is the best way to trade? The more I learn the more it seems like they all have fundamental difficulties. In your opinions, what is the best strategy?
I don’t like to be ahead of the market. Those guys are bigger, richer and smarter than I am, they have better IT, they have up to the minute analysis of the news, they have news I won’t ever hear of, and they have hours per day to refine what they’re doing - using someone else’s money.
So I wait for confirmation that price has rebounded, and enter with the resumed prevailing trend. If there isn’t a trend, I wouldn’t be trading.
Yes; you will, most of the time (apart from maybe on the odd occasion when it only just breaks the line, doesn’t go as far as your stop-loss and then reverses in your favour).
No - I don’t like to be ahead of the market, either. I’d rather wait and see, and make a little less profit, than play any more of a guessing game than I have to.
Nothing to compensate for, if I make sure I’m not ahead of the market. (I don’t worry about opportunity-cost: those are opportunities for “other people’s methods”, not for mine.)
Yes, I think so.
There just isn’t a single, objective “right answer” to this question, is there? There’s no “one size fits all” with trading (there isn’t really with clothes, either, I can tell you - in spite of some manufacturers’ claims to the contrary - unless you want to wear a tent).
What suits [I]me[/I] best is price-action-only trading, all based on support and resistance bar-patterns of various kinds, with fast-moving intraday trades, trading little and often, without indicators, and with tightish stop-losses, a lot of patience and discipline, and a concommitantly high win-rate. But that doesn’t necessarily make it right for everyone. And indeed, it [I]isn’t [/I]right for everyone.
Hello UGH,
I will suggest you to wait for a close period after entering a trade in either direction. For example, if you are watching 1-hour chart and the price is close to the resistance level, then you to wait the closing candle. If the candle breaks above the resistance level, then the price probably will move to the upside. On the other hand, a pullback to the downside is possible.
One of my first profitable trading set-ups was looking for engulfing 1H candles at key S/R levels, hence showing that the levels hold. Typically entering in the direction of the trend on a 50% retrace of the engulfing candle. A simple approach that had a good profit factor.