volente - how do you know if there´s a high probability that a s/r-level is going to hold or not? i´ve tried looking at price action and volume but no easy clues there, at least nothing i can spot... excellent trading as usual! /stalker
Support and Resistance is mostly going to have a high probability of holding. That is why they call it support *If you stand on a wooden bridge... majority of the time it will hold you, but if too many want to get on at once, it'll break*. Vice versa for resistance. Until support or resistance does break... you should treat it like it won't. If it does, then owell, that is life, sometimes stuff doesn't work out, so you switch your position to be on the side in control. There isn't no secret mathematically formula, or probability. That is just it. If it wasn't going to hold sellers, or resist buyers, it wouldn't be called support and resistance. Make sense? What you should really be determining *as my mentor says*, is who is in control. Once you figure this out, then you can better predict a breakout or breakdown, but until you do, you should not treat it as anything else but support or resistance. My mentor re-enforced this last night for me and it helped me out VERY VERY much.
Thanks Movery, I look at s/r and trend channels a lot together with price-volume. I like it but it´s difficult, need a lot of study to get it right. The line between success and failure is often thin, you just miss one little detail and you´re screwed. At least that´s my experience... I´ve read your posts and i hope you make it, /Stalker
Thanks... my mentor has really drilled into me, that trading is actually really easy. It's the mental part of it that every screws up on. I will admit, the chances of me being a failure would be a whole lot greater if I wasn't fortunate to have someone help me. So that is why i'm trying to help out others that don't get that opprotunity. It really is easy... it's actually doing what is right, is the tricky part that many screw up on. Buy at support, sell at resistance. If it shows a clear sign of a breakout, sell half your positions instead, and let the others breakout, if not, then you take less profit on the positions you kept, but you didn't risk anything. It might not make sense to many, but it really can be that simple. People *even I have* made this so much more complicated than it should have been.
Here is one of my simulated trading days. http://img296.imageshack.us/img296/3696/snapshot196mz.png I drew arrows to where I took action. TP = Take Profit TP 1/2 = Took half positions to let the others ride Long = Bought Long Short = Sold Short I made more trades than I wanted to... Again this is simulated trading. 4 support and resistance lines. Even I have some trouble some days. But it wasn't that hard. Buy at support, Short at resistance. Identify who is in control, and you can come out with some big breakout or breakdown gains. But if you think there is going to be a breakout, you should already been in the trade. You take half the positions, and wait for the other positions, if they break out, you hold on to those for as long as you want and take more profit. If you take all positions, you put yourself at risk by actually BUYING at resistance or Selling at Support. You NEVER... EVER want to be forced to do this as when I look at my charts and I do that. This is the only time I ever make bad trades. If you execute this ... the only thing you will have to blame is yourself, for not being able to identify support or resistance, or just making mistakes a bad trader would make, or a trader that is still learning. So one last time.... Buy at support! Sell at resistance! If it breaks support or resistance, then that is one bad trade. You should be able to get on the right track right after that to easily make that up. Some days are easier than others. Some days it channels between two support and resistance lines all day. Some days the price breaks all day long. Just understand where support and resistance are, and execute based on what I just told you... and what good traders do. Volente does the same thing, he has a 20 point stop. He is successful without a doubt, more than I am. I am a new trader and I understand these concepts and am confident I will go far. So, focus on understanding this. Get yourself a good charting package where you can easily manipulate the chart as you need to accomplish drawing support and resistance and act on what you see... not what you think, or feel is right.