Spikes Addition in Support and Resistance

Beginner Questions Candlesticks, Chart Patterns, and Price Action
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Dear Experts,
Is it ok to add comperatively high spikes in your support and resistance zone or we should stick to marginal spikes.
Thanx in advance for guidance.

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This is a question which might seem simple, as if a Yes/No answer will make support/resistance work 100% better.

In fact, this absolutely sums up the over-confidence that teachings about s/r levels tend to give to new traders. In reality s/r levels are subjective. Does it really matter if you used the strictest most precise rules for setting s/r, or maybe it’s just as effective if you stand at the other end of the house to assess what’s on your screen?

Of course, some other artefacts such as trendlines, range boundaries and trend channel boundaries are even more subjective, so maybe s/r isn’t the worst guide.

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If you’re looking at an obvious SR level then you can be assured, so is everyone else, including institutions. So, there’s a good chance that “everyone else” has their SL placed around that location, which is easy pickings for the big guys.

So IMO the answer is likely yes. You should always account for spikes, aka: fake breakouts, of any SR level when choosing a location for your SL. Maybe chops a less obvious level.

But as Tommor said, these levels can be subjective because we all look at SR levels differently and on different TF’s.

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Yesterday, I entered a EUR/NZD selling trade early in the Asian session on my LUX demo account. I had a T/P & S/L wide spread following a previous support and resistance level. That worked well for a profit.

I also copied on my live account, with a smaller T/P & S/L spread which failed. It was unfortunate to have chosen the only 4hr price action candle in that range that blew my S/L.

IMO, this is a probability evidence why retail traders can fail - me included - is that their account size, and 1-2% lot size risk exposure is not large enough to prevent small retracements or spikes from hitting the S/L.

And that is also evidence that the big boys avoid these minor wave upsets because they can afford to trade a wide S/L.

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