Trend Trading, advice once support is reached

Beginner Questions
1

Hello All,

I need some advice or best practice,
Today I closed a trade that reached support level, where I had a TP set.
However, when I look at the chart, all signs point to a continuation of the trend and a break of the support.

If you are a trend trader what do you do?
I am on MT4 and I don’t believe I can take half of the trade out and continue with the other half. What I did today after the trade closed and I secured the profit, I opened a new one with a smaller SL and I am monitoring it closely.

I don’t want to be a scalper, so start setting small TPs is not my strategy,
do you have suggestions?

Thanks
Nic

2

@737ngx Welcome!

This can be done on MT4.

bring up the Terminal window ctrl-T, click on the trade tab, left click on the trade and that should bring up the trade “box” adjust lot size with click down menu or highlight and type it in, then click close.

That should do it. This may also be done by left clicking on the trade/position line on your chart.

Good luck,

KC

3

I ignore resistance levels in uptrends and support in downtrends.

I find it helpful to identify a stop-loss using volatility.

4

On my MT4 is greyed out.
This is just an example of an order I just opened on Demo to test.

Capture
Capture804×412 53.2 KB

5

What indicator do you use for volatility? I like to give it a test.
I assume that when the volatility drops, you get out… but in an entire trend volatility can go up and down multiple times…

6

I use ATR. Actually as a long-term trader I use 2 x ATR20 for the initial stop-loss that dictates the size of the trades (account capital risk 1%).

As the trade goes into profit I trail the stop behind it, using the current ATR, not a fixed number of pips.

1 Like
7

It is a quite difficult to give an advice on particular setup without seeing a chart, but let`s speak about the main principles.
First of all, it depends on particular instrument (currency pair) because each of them has its own movement style and dynamics. Sometimes it is necessary to watch the price movement for several days to get familiar with it.
Support levels may also be different. The importance of support level depends on the following key elements:

  • timeframe (support level on daily is much more important than on 15M, for example)
  • number of times it was retested
  • confirmation by volume (each retest accompained by increasing volume)

So, first of all you have to analyse the support levels you have. By the way, it would be great to mark all important levels each day before trading to be able to make assumtions on the potential of certain price movements.

If you are doubt whether to close position after reaching the support level or hold longer, try to use the following approach: pay attention to the reaction of the price when it touches the support level (or enters the support zone if it is wide enough). If the price bounces back on high volume and forms a consolidation in the upper range of such bounce, it could be reversal or, at least the substantial pullback/correction. But if the price movement slows down and it starts moving horizontally in the lower range without any attepts to bounce, this could be a sign of possible breaching the support level.
Plus, there is a common breaching confirmation tactic: watch for the candle that both opens and closes at the other side of the support/resistance level. As usual, it helps to avoid false breakouts.

8

Thanks for you suggestion, what indicator do you find reliable to check volume?
I do draw my lines on the daily chart, even if I trade the 4h chart, so I am glad I do that right :slight_smile: