best ways to tell that S or R is holding?

Discussion in 'Trading' started by flier6, Jan 4, 2009.

  1. flier6


    I need some help in regards to determining if a level is holding or not in real time.
    Let's say that price is trading up toward a resistance level that I think will hold and I want to get short at that level. What are the things I should be looking for before entering short?
    Thanks for your help.
  2. nkhoi

    nkhoi Moderator

    use sell stop order.
  3. In other words the value of entering at S/R lies not so much in increased accuracy as it does in assessing the amount of risk versus the possible reward.

    There is a way to increase accuracy too but people ignore it so much.
  4. horrible, horrible advice.

    follow it if you like throwing money down the drain or in the garbage can.
  5. bingo
  6. flier6


    What is the way to increase accuracy?
  7. flier6


    I'm not following you. Maybe I didn't word my question very well.

    I'm thinking that there must be ways to verify that R or S is holding before entering.

  8. If the ES or a big big cap stock then watch the Tick. If looking to sell but the tick is around 200-400 then that is not the tick of a market to fall too much at that time. If tick is flat maybe going between neg and positive then that is the tick of a market that may reverse. Two points in the ES is what many use to determine if support or resistance has failed or held.

    Other clues are how much up is the market? Also is the Naz up a higher % then the Dow. Generally when the Naz is leading the Dow then it shows strength.

    Also are there any drivers in market today? News, reports, Fed comments.

    You need to determine if market is in trend or not. A market with no news, naz not leading the way, no drivers, and with a weak tick at resistance is generally good enuff to give it a shot.

    As far as accuracy, what you really are looking for is confidence. The more confident you are in the set up the greater the expectancy is. Let expectancy control the trade, not risk. Just because your stop is a certain spot doesn't mean you should expect 2x that. Market doesn't care.

  9. flier6


    All good stuff John. Thanks.

    By expectancy, do you mean the distance between the entry and the next area of R/S? In other words, how far you expect price to go before encountering additional roadblocks?
  10. If it isn't going above R or below S, then it's "holding".

    Are you sure you're asking the question you want to ask?
    #10     Jan 4, 2009