I came across a futures trading primer from DanielsTrading.com, (StoneX's futures trading division) which dived into trading futures with this strategy. This is a basic TA kind of strat that everyone who gets into trading finds out about, but it seems too good to be true. Just buy here and sell up here, and make money? Yes, you can buy at what you thought was a support level but later broke out to the downside (vice versa w/resistance) and plenty of breakouts don't end up working and people fall for false breakouts, and that there are a whole host of factors involved into becoming a successful profitable trader, including proper position sizing, risk management, emotional control, etc., But with all this being said...the strategy seems so simple I don't understand how it can be profitable. It seems too good to be true. I mean I get why it can work. People see the same charts, lot of volume around these key areas, especially when key levels break which causes an influx of new orders, supply and demand zones. It makes sense, but I guess I'm just flummoxed by the simplicity of the strategy and the idea that you can make money from something so basic. I've never traded, am pretty conservative with my capital and don't want to jump in with real money until I internalize the fundamentals (which I think would speed up the learning process and reduce costly mistakes), and I get that there are many strategies out there that suit different people. But can you really just trade support and resistance and make a decent living out of it? What's the success rate of trading this simple strategy across different markets?
Years ago, I used to have thousands of support/resistance lines on a chart. It was so numerous that I couldn't see the candlesticks. Now I have zero. Happy exploring the SR strategy.
Do your stats. Interesting Search Terms How to trade support and resistance https://www.dogpile.com/serp?q=how+to+trade+support+and+resistance... Post by: easymon1, May 29, 2022 in forum: Technical Analysis
That is a purely discretionary strategy, as you cannot find any edge systematically, when you code it with rules and backtest/forward test it. And it takes years to master it, so be sure not running out of fuel as it can take a lot time and pain to be profitable here. But I know a trader who is very profitable on that kind of trading, so it can be done despite it is not an easy approach to master.
Well support and resistance is a very small part of TA there are many other things that needs to be taken in consideration when entering a trade expecting to understand how to trade with out any experience losing money watching the chart behavior etc will most likely lead to a loss.
BUT... your takeaway could be that you don't need the lines anymore to see S/R. At some point, you just see it. imo, S/R is good for confirmation, but meh as a primary strategy/indicator. For my style, at least.
You should listen to your own advice. The typical point-and-click retailer trying to tick-fuck ES using magic lines has less than zero chance. That said, momentum and macro trends do exist in markets - look for example at the JPY or US bond futures over the past year, or countless stocks, ETFs and stock indices in the runup to 2021. Capturing these kinds of moves on a swing basis (holding for weeks to months) is an accessible strategy for well-capitalized retail, and simple TA tools like "support/resistance" or chart-point breakouts can provide reasonable entry signals. You just need 1) enough capital to pay yourself while still building your bankroll on low to mid double-digit returns, 2) an entry strategy that doesn't get you chopped to mincemeat when markets aren't moving much, and 3) a risk/position-management and exit strategy which can capture the big outlier moves while keeping MtM drawdowns low, and letting you achieve some measure of consistency in returns. Nothing easy about it.
Hey man, would you say that you are more likely to day trade, swing trade or hold for weeks or months?
I am more inclined to swing/position trade. I like exploring different asset classes, so futures are brand new to me, but I know more about stocks. I am currently studying CANSLIM and "How To Make Money In Stocks" by O'Neil. Also picked up Minervini's books recently, but haven't read them yet because I'm reading O'Neil's work which I feel is an essential primer to this kind of trading. Reason for me being more likely to swing/position trade is the greater time duration to think about and internalize the trades, and the ability to catch the big moves. With day trading I feel you have to be more fast twitched and skilled on the fly which I personally am not. I understand that this can be worked on, and I do want to give all kinds of trading a try including day trading, but I'd rather focus on a type of trading I think suits me and that I believe in from the beginning. I also like how CANSLIM includes some fundamentals, like earnings growth and qualitative factors, I think it matters a lot when your trading new IPOs especially. Typically companies that make big moves in price, be they fads or legitimate innovative disruptors have solid growth fundamentals before they breakout this way. I also like how day trading is purely technical. I am attracted to this kind of trading too and futures in particular because it's based solely on the product and you don't have to worry about earnings reports, M&A, corporate scandals, activist investors, buybacks, dividends and all other shenanigans that affect stock trading. And also you don't have to deal with overnight risk, gaps in price, etc which can't be said for swing/position trading. A clean slate each new day is nice.