I’m new to forex as well as the pip community and had a couple of questions with regards to support, resistance and hedging positions.
I’ve read that in Forex only certain exchanges allow you to do this, open both a BUY and SELL position. I’m currently practicing on a demo account on Forex that doesn’t allow hedging, was curious which exchanges (if any) do?
When the charts are approaching areas of support or resistance, do traders assume there will be X amount of approaches before a breakthrough occurs? I’m interested to hear other peoples experiences regarding this
when taking support and resistance into account, how many pips either above or below an area of support or resistance would you put an order if you’re objective is to hedge your current position.
example:
Enter a long-position with USD/CNH @ 6.45123
Support is at 6.45000
I want to put a short order just below resistance incase things don’t go as planned
This all depends on if your country allows hedging. I would do a quick Google search on that first, or ask your broker. I’m from Canada where hedging is permitted, however, it is not in the USA.
There’s no sure way to know if a support or resistance level will hold or not regardless of how many times it’s tested. SR levels are subjective too, people see them in different places and depending on the time frame. Some people use the wicks, some don’t.
Instead of thinking in terms of pips, consider looking at the bars. If price bounces off S, a good strategy is to wait for that green bar to close then put your buy order just above it, then your sell order (hedge or SL) somewhere below the most recent low (or lows in this case).
Below is an example on the 4hr chart you mentioned. You didn’t specify a time frame so this example would be something I might do. And since I don’t see much in the way of support at 6.45000, I’ve used 6.4270:
Please do not duplicate this example. When markets open the increased spreads could trigger both of these orders at the same time. Plus, price direction can be very unstable for the first few hours.
This all depends on if your country allows hedging. I would do a quick Google search on that first, or ask your broker. I’m from Canada where hedging is permitted, however, it is not in the USA.
does that mean I would need to use a non-american exchange? or rather, an exchange from a country that permits hedging? because I’m from the US but am currently in Asia
In response to number three I would suggest placing your stops in accordance with price action and correct risk management. I don’t think it’s as simple as saying 10 pips below as you have to factor in your risk as well
Regulated brokers ask for proof of identity, such as photo ID (Driver’s license), tax information and credit card/bank statements. I’ve never dealt with a non-regulated broker so I can’t comment on what info they would require from you.
I’m sure another member can jump in and answer this properly.
You can use different brokers like Hugosway that allow it and it doesn’t matter where you are or what country you’re from. Hedging is quite advanced and you can get whipsawed easily. In your original post you said you were new so i would advise sticking a basic strategy and watch how the markets move.
Well, when I set support and resistance levels I always check how much times earlier the price touched the support/resistance level and on this matter I decide whether I open long/short position or not. If the price touched it once and then bounced, then perhaps I won’t open the position, because as a rule, the price touch the level at least 3-4 times before breaking it. Nevertheless, sometimes support/resistance levels betray me a lot, when the classical scanerio doesn’t work. It happens when the market is so volatile and there is some sinigifcant news. I apply to volumes and densities in such times.
Guess that you can do actions according to you plan. If the support or resistance level is broken by the price chart then it’s a signal to open position whether up or down. Here also everything depends on the trend, I always check trend before the setting the levels of support and resistance, everything because sometimes you can be really mistaken about support and resistance levels, because of the trend. Anyway, if you open the position and you see that the level was broken you whether continue waiting for the income or open new reversed position.
I personally like to trade in combination levels/zones + volumes. In this case you will see where you can buy an asset and then appeal to the levels of resistance or support, it depends on what type of position you opened, bearish or bullish one. In my opinion, traders have to try various combinations of different indicators/patterns or figures. It makes them much more flexible than they are and actually it’s one of the most important feature of a good trader. Being flexible means that you can adjust under any circumstances, without any risk or doubts that you will lose money. It’s pretty useful to know how to be flexible.
On 1H timeframe if the price tested support once and after rebound heads for a second test I consider it as a breakout condition. I also look at 50-100-200 SMA and RSI confirmations. I generally avoid trading breakouts on lower timeframes because I feel market is more random when you zoom in, less chances that people will pay attention to the same thing and make technical pattern work.
