1 tick stoploss?! Don't you get stopped out 95% of the time? From what I can see support and resistance are "ranges" or "zones" and not a single, precise price.
From my observation of intraday charts there's a very high degree of whipsawing or "rinsing" (as someone else calls it). What happens is the price approaches the resistance. Most of the time it's broken by like 1 or 2 ticks on the first try. This is when games begin. By the powers above, price starts magically whipsawing, criss crossing the R line above and below. It does that 3, 4, 5 times cleaning out the pockets of both breakout players and "the sophisticated faders". That's why I hate S/R lines, because this happens very, very often.
guru5 could you please maybe post some chart example of this S/R fading with your typical risk and reward.
In regards to S/R being a general line, this is true. However, sometimes it isnt....numbers like 1000 on the Naz e minis, 900 on the SnP E mini...etc. Other than these obvious ones, when trading with a very short time horizon (i.e. 1 second to 5 minutes) certain numbers do act as S/R time after time intraday. The next day it may change somewhat. Often, the price will have to go through the bid AND offer for the S/R line to be breached on intraday moves.
almost all my trades come from trendlines showing s and r. I play the short at res and buy and support all the time. One of the really nice things IMHO is that you can post and capture the spread going into the trade. I also buy and sell breakouts if qualified and fade breakouts if the breakout is unqualified. For me this works and for someone else doing the same thing it may not work( I think you have to believe in your signals ). I think a primary factor is find ANY method that puts the expectation of gain in the positive ( odds overall in your favor) and sticking to your plan. I know the more I obey my own rules the better I do. My percentage of winning trades IMHO is to high and to consistant to be just chance or a "random walk" and as long as they are I will be sticking with my two friends, Mr. Support and Mr. Resistance
I use S/R exclusively to enter/exit and for trailing stops. It is the most consistent phenomenon that exists in trading (stocks or futures) IMO. Most people know the S/R for their time frame, and subsequently increase volume at those points by buying in anticipation of bounces, or fading and tripping stops the other direction. Regardless of the outcome, there is a war fought at key points all day. The key is to know how to play them, know when you are wrong, and always reverse into weakness. Managing the exit becomes the next hurdle after catching a ride. Some people say never to reverse you'll get churned (I still haven't figured out that line of thought?) It's a more powerful signal than the bounce to me. IMO you have an expectation at each S/R point. If it meets your expectation that tells you something and if it fails that tells you something. Where else can you get such good info?
ddefina, I couldn't have put it any better. If the support where I'm looking to buy does not behave like it normally does, I just short it.
well unfortunately im seeing more of "general talk" rather than specific examples of the "this is how i use S/R" type. i would really prefer the latter, so Reason1, ddefina, and others, if you may, please elaborate
So what I'm reading from some of you is that you use S/R exclusively? From all the price action and charts I have viewed, it seems that a lot of 2-5 day breakouts are successful for short term profits. Am I just seeing what I want to see? It can't be that simple. But simplicity is good.