Support/Resistance Trading (Using Supply and Demand)

obeavers · Jul 11, 2009

Quote from NoDoji:

I attended a couple of Oliver Velez' free webinars and they were a superb lesson in using candlestick patterns to read the footprints of crowd behavior and project quite accurately the direction the crowd will run next (continuation of trend or reversal).

Doesn't that sound so simple? Either a trend will continue, take rest and channel for a while, or it will reverse. All we want as traders is to follow the crowd (the direction of which is created by supply/demand imbalances).

What I learned in these webinars was very useful in putting on high probability trades; the important thing is to get out quickly when price reaches the point the trade is invalidated. (There is a lot of sales hype in these webinars, but the trading info was fantastic.)

I just attended a free webinar with Pristine and was surprised at how tight their stops were. As soon the trade signaled entry they were in, but the stop was a penny or two from the invalidation price level (stops .05-.15 cents). There rationale was if the trade was valid it should go their way quickly.

I found that when I'm very patient and wait for the best setups, I can also place very tight stops without getting shaken out, but when I jump in too quickly, I either have to use wider stops or I piss away money with small losses before catching the move I'm looking for. Fellow trader retire45 on this site once posted "Will the trade survive my stop?" Great pre-trade question that helps you sit on your hands until the setup is truly ripe.

To learn more about choosing strong setups and invalidation points (stop loss points), I suggest reading Velez' "Tools & Tactics of the Master Day Trader", Alan Farley's "The Master Swing Trader (tough read, but worth it).

This is probably more info than you need, but it's all good!
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Superb post. Ill be sure to look into those guys.

SwineFlu · Jul 13, 2009

Quote from MandelbrotSet:

Here's a couple of bad calls by The General that illustrate what I am talking about.

Bad Call #1

Bad Call #2

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Mandelbrotset Exposed

http://www.elitetrader.com/vb/showthread.php?s=&threadid=169607&perpage=6&pagenumber=7

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Support/Resistance Trading (Using Supply and Demand)

obeavers

SwineFlu