I am a novice swing trader just trying to make the cut at even right now. My question is: what is your trigger for support and resistance plays? For example, say you are trading a channel between 22 and 24. Would you enter a long when the stock dipped down to maybe 22.10, or would you enter a buy only when the stock dipped to 20.10 and then retraced back up to 20.25? Also, would the occurring time of any of these numbers matter to you? For example, I've been trying to ignore these numbers during 9:30 - 10:30 and 12:00 - 1:30 (Eastern times), since the market is volatile and random in the morning and practically non-traded and weak during lunch. Thanks for your help! Best Regards, Greg
lots of factors to consider, but assuming you had reason to believe the stock would go back up, I'd probably buy it at 22.05, with a 15 cent stop if volume was declining on the down move. I would not wait for it to move back up before buying as this would give me a shitty fill. I would have my stop a bit below the support as traders/ market makers often push it through obvious levels just a bit to profit off stops. IF they can get it there in the first place that is. Anyway, in this case your R/R would be a 1.95 profit goal (although I'd personally dump before 24 even), with only 15 cents risked. Its a pure numbers game for me. I assume every trade is random even if it really isn't, that way I don't have to be right on each trade. Just right often enough. 40% correct would make me a bundle on the risk ratios I aim for.
I do have stops, but I didn't mention them. If I entered at 20.10, my stop would be 19.90 or so with a goal of 21.90. If I waited for the stock to fall to 20.10 before buying 20.20, it would still be a goal of 21.90 and stop 19.90 but with presumably a better probability of filling, since a bit of upward momentum has been established (even though a consolidation pattern can often be expected). My recent trades have been with the lower entries, but do you think a momentum play upward does have a better chance of filling? Thanks for your help.
in your first post you talked about a channel between 22 and 24, and in later posts it changed to 20 to 22? you might want to clarify that.
just a difference in strategy. i like good fills. i would look at other things such as volume to determine if it was a good trade. a move 10 cents in my favor first doesn't mean all that much in my book.
I think I agree. It is normal to expect a small correction once a support is hit anyway, even if it blows on through. Thanks for your help. Best Regards, Greg
I would see what the volume looked like at said support level and then if the low of the support is not breached and price bounces, buy as close to the support as possible with a stop right bellow the suppot for a low risk entry. See what your proximity to the nearest resistance level is and mke sure that you buy enough shares to give a worthy profit...
I trade off of the technical levels of the s&p500. See This free technical analysis video here ---------> www.theoddlot.net