Am I the only one who think that support and resistance lines are just random lines and don’t work?
Unlike most traders, I don’t follow a trading advice blindly, I try and test any suggestion before incorporating it into my strategy.
When I first started trading, I tried using support and resistance, but at the end of the day, it seemed a lot random and prevented me from taking a lot of good trades. I took it off my chart and I’ve been on a net profit since.
Ever since I read that the failure rate in forex trading is about 95%, I got really skeptical about general rules followed by the crowd.
The big question is, why do everyone talk about using support and resistance level in trading, it’s just all up in my face. When I’m on YouTube or anytime I google anything related to forex I see support and resistance as part of my search result, is there something I’m still missing?
I feel like it’s a myth believed by the majority of traders.
It just seem random to me.
I don’t in anyway condemn those using it, maybe I’m missing something. If I am please explain the concept in your own way. Would love to improve my “trend trading” strategy with it, if it truly works.
There are many people who do not follow “Support and Resistance” and still make good money - @tommor is one, whose system ignores those and news. He wins.
So I think the question I need to ask is - if you don’t use S&R - what indicators / style of trading do you use which makes the “S&R” go from a positive to a negative on your account balance ?
You are right tho’ 95% being WRONG - is a pretty good indicator that they’re doing something incorporated in their education which is counter-productive.
when i kicked off trading at the first time , honestly speaking it worked most of them time with successfully , but i don’t know why its not working right now in my trading.
I use s/r levels to identify potential entry orders and s/l placement.
I think traders can get into trouble when using s/r levels because they are too quick to jump the gun when price breaks thru an s/r level or when they try to anticipate a bounce at the first sign of price holding at an s/r level.
I dont think its a must, but s/r is one of only 2 tools I use, the other being price action.
I wouldn’t say they’re “random” per se (which I initially thought also) but they are pretty subjective. If you combine it with other indicators like Moving Averages, then it becomes a more useful tool.
Yeah, but the problem is that, everyone has his own way of drawing them, that’s why I think they are random. Cus, where I might see a support, someone else might not be seeing anything there.
I prefer to watch price action and if price action shows the market slowing down by a support/resistance line then I anticipate a touch+bounce
Otherwise I expect it to just go straight through
Remember that the market is the crowd and the crowd is often irrational. You can stand there rationally saying this level is important but the maniacs driving the market aren’t so rational and they don’t care.
You must care about what they care about, not the other way around.
On the way back they might suddenly come to a moment of realization that there’s a supp/resistance level there and you may get a retest and then continuation.
That’s why I prefer to follow price action and mostly ignore supp/resistance, but they work beautifully if you just want to apply probabilistic outcomes and trade based on this % chance it touches and reverses or this % chance it just runs straight through.
Alternatively you could be looking on the wrong timeframe at the important level and maybe there’s a more important one further down the line that the market is running towards.
Like most things, supp/resistance isn’t wrong, you are.
Yes it works in certain kind of market. In sideways or ranging market support and resistance works. But they both are not The China Wall, it has to be broken. But the main point you said. Trading is all about what works for you. Don’t bother what works for others. It takes time to find out what works for you. Once you get it be happy. And stay away from the crowd.
Yes SR really work. But SR won’t work all the time. The analogy is like a tree and an axe. SR is a tree and price is the axe. When you hit a tree with the axe, sooner or later it will be broke and down. When price hit the SR (major/minor SR) , it might bounce first, but as it is hit repeatedly sooner or later it will be broken.
I use SR and simple moving average. Both are fundamental for my trading. MA is like GPS for me, to indicate whether it is long or short. And SR is used as my risk tolerance
I like to see the market as a large cumulation of pending orders. Banks and large financial institution place them on specific price levels for several reasons.
They might be involved a long term investment, but they believe price is going to go against them for a while. Because of this, they place an opposite trade on a price level in order to hedge their position. Once this order fills, price usually moves in their direction just because of the sheer volume they trade.
Businesses might be interested in buying a specific asset but are worried of price fluctuations, and so they place futures on price levels that would allow them to get the best deal they can get. Just like the first example, this moves price.
Traders care about them. They place their stop losses behind supports and resistance, which means that price is likely to be reversed by them just because of the sheer amount of stop losses being triggered.
All of this is represented by bounces on the chart. If you see a significant, large price move, you can be sure someone really big entered the market at that point in time. Chances are, he’s going to do it again.
Yes, but it took 10 years (off and on), countless losses, several account blowups, a few mentors, obsessive dedication and a ton of HARD work to achieve.
And after all that, I still have a long way to go. My next goal is to be able to say that im consistently profitable over a long term period.
You’re not distinguishing between historical S/R and future S/R, which makes it hard to discuss.
I think that maybe when you say they don’t “work”, you mean that it seems to you that historical S/R don’t become future S/R often enough to be helpful to you?
Not trying to be rude to you, but that’s actually about you, not about S/R. It’s about distinguishing between the levels that have a high chance of repeating and the rest. It’s a skill that takes a lot of education and a huge amount of practice to be acquired.
The reason I’m saying that is that although I’m sure you’re not alone among Babypips members in feeling that, if you were to ask the same question of a group of people trading for a living, they’d all tell you that their perspective is about the opposite to yours.
That’s because they’re all using that strange thing called “price action”, and most price action rests strongly on S/R. (Even the ones who use indicators are using them for a sense of direction and entering their trades on a price action basis, i.e. directly or indirectly using S/R).
I would suggest the opposite here, too.
There’s no such thing as “supply and demand” in the retail spot forex market. It’s all about “buying pressure” and “selling pressure”.
You will perhaps say (as people do, because it represents what they think) “Well, that’s what I mean by ‘supply and demand’,” to which I could only respectfully respond that in my opinion, on both a conceptual and a practical level it’s actually a very, very different thing altogether!
