support/resistance penetration

Discussion in 'Technical Analysis' started by danimal84, Mar 19, 2007.

  1. danimal84

    danimal84

    anyone have a good method of differentiating between a support penetration (or institutional shakedown) and LASTING selling orders?

    for instance, let's say your long at 10.00 (which has chart support), and waiting to sell at 10.05. assuming you havent got long at an absolute bottom, let's say the price moves 2 cents against you. is there something that works other then hanging on and praying?

    this question is posed from someone who trades on the NYSE, but i'd be interested to hear something that works on another market. thanks
     
  2. ER2

    ER2

    Hoping and praying isn't required -- just make your trade and set the stop. Getting stopped out is a good thing because it protects your capital.

    If you are getting stopped out too frequently then perhaps your stops are too tight or you are using the wrong tactics for that particular market.

    Mark
     
  3. What makes you think price will bounce from this "chart support" to begin with? Something you read in a TA book? Backtesting? Experience? Maybe it's not the answer ur looking for, but if u dont think about this question seriously, it is only your account that will be vigorously penetrated.
     
  4. 4XIS4U

    4XIS4U

    Try understanding the context instead of thinking about the numbers exactly -- how does the current support behaves compared to the last support?

    Hope you understand the example...
     
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  5. danimal84

    danimal84

    i'm going to take a guess here, and say you don't know shit about shit and are trying to sound like something your not.
     
  6. danimal84

    danimal84

    thanks alot, i appreciate it.that makes a ton of sense. i kept a closer eye on the bigger picture and it worked swell for me today
     
  7. =====================

    Dan;
    I like the ''context'' remark,
    including but not limited to 50 day moving average, which is/has given a clear sell signal since 2-27-07 .[SPY,ES,QQQQ.....]

    Not meaning only short since then;
    meaning closed out longs earlier today,
    for sure earlier than early/mid February uptrends.

    Would rather pray before i get in, but more early prayer, the better.:cool: Focus on a few helps, even when i do daytrade[with charts, not scalping]
    to me ,
    2 cents is noise.IF you can use those tight stops/profit, fine with me;
    but i cant use stops that tight.

    Focus on a few helps;
    time tells on institutional selling, years of observation helps .
    =======================
    & repeat the pattern, focusing on a few helps.

    Some daytraders dont realize it but over time, even 200dma shows up intraday [its up, helps support at 10.00 maybe]. But with 50dma sell signal, thats why i closed out longs early[lunch today]

    If market[for me QQQQ, ES, SPY]stays above 50 dma ,which it may not];
    good for long/bulls.If not most likely see longs harder/less profitable & shorts better, below 50 dma then.

    :cool:
     
  8. Quote from danimal84:

    anyone have a good method of differentiating between a support penetration (or institutional shakedown) and LASTING selling orders?

    for instance, let's say your long at 10.00 (which has chart support), and waiting to sell at 10.05. assuming you havent got long at an absolute bottom, let's say the price moves 2 cents against you. is there something that works other then hanging on and praying?

    this question is posed from someone who trades on the NYSE, but i'd be interested to hear something that works on another market. thanks

    ***

    Hi there,

    It's hard to tell the difference, and support/resistance is such a judgement call anyway. When scalping and daytrading, I presonally prefer support and resistance to be supported by one of the common moving averages -- say the 20 MA on a 5 minute chart. Or the 20 MA on a 15 minute chart.

    Anyway, what I would be more interested to know is why you would take a position at 10.00 and consider selling it at 10.05, but being concerned about a 2 cent move against you. I personally think that is way too tight of a stop loss. If you are trading a volatile stock that is cheap (say $5 to $15 a share), the price swings can be huge and extremely rapid -- like a 5 to10% price swing in a matter of 60 seconds. The stock symbol LEND was doing that all week long last week.

    At any rate, when I trade cheap stocks priced at $5 to $10 a share, I take extremely small position sizes of around $10,000 or less, and I give the stock room to breathe (about a 25 cent stop loss -- or about a 2% move against me).

    Cheap stocks experiencing high volume move like lightning when they break away -- it's easy to rack up big losses fast even with a small position size of say $20,000 or so.

    Hope this helps.