Trading Basics - Support And Resistance

Beginner Questions
1

After all the years I’ve been ‘trading’ , and take that with a big pinch of salt, you can’t call looking at the 5 minute charts, and pressing buy or sell every 10 minutes, half hour or something silly like that, yes most of us have done it.

Eventually I got on to the longer timeframes, I had long periods of profitability, following my method, and then mmm… well if at first you don’t succeed then try and try again.

But what I do know that if you don’t get the absolute basics right, and get them to make sense then you probably will struggle.

So here goes, I’m thinking this through as I go along, but I think if I can explain it and it makes sense to me and you, then good, it will help all of us hopefully.

If we look at the Daily GBPUSD chart, then we can see that we are at a support/resistance level, so, will it break resistance or will it hold? Well, it’s broken resistance a little so that’s a possible sign.

Now if we look at the weekly, it looks like it’s going up, so wait for it to go up, and what happens often after it does, it comes back and the resistance acts as support, we know this because we can see it on the chart, it happens over and over again.

Right, we’ll see what transpires over the next few days and make sense of what happens.

2

Hi,

Is there a question with this?

Best,

3

Not really, maybe rhetorical as in the question is ‘What happens next?’, only time will tell, but we will analyse and learn as we go, and see if we get a trading opportunity on the way.

4

It is forex trading. Of course it is not exciting all the time. But in the beginning of trading it is exciting that’s why we all did it in our trading career. The thing is looking at the charts all the time needed only for day trading and most of the newbies do day trading. But as the time moves on trader also move forward and eventually they start long term trading. In the long term trading checking all the time is not needed.

5

Every sentence is ridiculous.

I just hope that even the beginners here have enough common sense to ignore this guy’s opinions completely.

6

Aye, I remember it well, the Highs and the Lows! Now I just have a look in the evening (UK Time) and if there is a setup I like, I will place a pending order, same again in the morning.

7

Clear support and resistance, stop around 1.302 level, pending order about 20 pips above, target around 1.315. 20 pip loss vs 100 pip gain.

Let’s see if it works…???

8

Well done for posting something real - Instead of teh negativity towards others which seems to abound here ! :sunglasses:

1 Like
9

I basically use high time frames (daily and weekly mainly) for identifying valid support and resistance levels, then I go for lower time frames for my entry and exit points! This system helps me a lot!

10

It went in the right direction, it collected the pending on order and has moved 20+ PIPS into profit, you can close half your trade then the rest of it is at no risk.

Now let’s have a think about it, one thing that’s clear is that you would have got this trade with an even tighter stop loss, sometimes it wouldn’t have come back down as far, so you miss a trade, BUT at a 10 PIP stop loss, and a target of 100, we are talking 10x return if you were to keep all your lots to the target, or you could keep some after the 100 profit to see if it goes further. So say at a 2.5% risk per trade, you could be looking at 10x profit, that’s 25% profit in your account, 2 of them a week, and 50% profit on your account, doesn’t seem so Pie in The Sky anymore, you are likely to run out of leverage/margin before you can do that, the above is just to illustrate the possibility of what you can do on the longer timeframes.

11

Let’s apply the same thing again.

Short this time, SL above the support and resistance level, pending order about halfway down the last red candle.

Remember, this is forex, we are looking for overall profit, the GBPCHF trade might look like wow, especially if it keeps going up, it might come down and stop out, but it will break even because half the lots are closed. This USDJPY might be completely different, but what we will do is apply exactly the same principle to each and every trade, profit or loss will come in the long run, but if we are 100% consistent in each and every trade, we will learn.

12

I like that approach, because sometimes it will come back and retest. Those who move their stop up to the entry point will be stopped out then still at break even.

If it came back to retest would you bet again, close or let your half position run ?

13

Well, this is it, I entered the trade, took profit around the first high, so far so good, then I decided to move my SL, then that took slightly less profit than the first take profit. Then I have nothing on, and I didn’t get into it again, but my initial intention was to close half not move my stop and let it run, at this stage of the game I’m better off doing what I did.

But this is what you need to do, do the same simple thing over and over again, support and resistance, trade it, manage trade and work out, what suits you. Just keep doing that, it doesn’t matter if your demo account is losing money, after time you may make a profit from it, but at the very least you will find what makes you the least losses, and then you have a solid basis for which to develop your strategy.