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Is strictly trading support and resistance profitable?

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  • #1
  • First Post: Feb 23, 2017 11:34pm Feb 23, 2017 11:34pm
Hello, yet another newbie on Forex Factory. I ask this question because in a couple of months, I plan to start trading with real money and will strictly use support and resistance. So, some background information about me. I've been demo trading for the past 6 months and was profitable for 5 of those months. My strategy was mostly fundamental, as I would try to trade after big news in the global economy. I soon found out that this was not the most consistent strategy (not really a strategy TBH). So my question to you is can someone build an account from only using support and resistance? Feel free to post pictures of your own drawings, as this thread can be a place to discuss S+R charts. Thank You
  • #2
  • Feb 24, 2017 1:27am Feb 24, 2017 1:27am
If you can read SR levels well, your trade should get you into profit quickly and place you in very profitable trades.
However, there are many SR levels and price will respond to only some of them. The skill is to work out which levels work.
You also need to work with a tight stop loss and lot your profitable trades run. A Reward to Risk ratio of 6:1 or better.
Use of indicators will prevent you from trading this way.
You really need to consider the elements of "order flow trading". This is about reading where the big traders are about to enter and following them.
This , in turn, means learning who these major players are, inter-bank trading, intra-bank trading, hedge fund activity, large investors with spare cash to use short term, etc.
I hope you get some sensible responses to your thread. I somehow doubt it though.
People who are good at this type of trading are either unwilling to talk about it or would struggle to explain it in any detail.
Best of luck, H.
  • #3
  • Feb 24, 2017 2:32am Feb 24, 2017 2:32am
I always use S&R levels combining it with price action. What can I say here... it works in the majority of situations. Not always, but in 90% of them.
I'd recommend to learn how to read them, even if you won't use these instruments every day.
  • #4
  • Feb 24, 2017 4:07am Feb 24, 2017 4:07am
Using HTFs' S/R levels will be very helpful; you trade on the LTFs but get the S/R levels from an HTF, say at least 4 times your setup tf.

Trade safe and prosper.

KP
Do your homework, follow the footprints of smart money
  • #5
  • Feb 24, 2017 10:36am Feb 24, 2017 10:36am
Trading S/R strictly is like trading anything on its own(candles, volume, indicator, etc), its not gonna work!!
Learn, a forex trader must, unlearn and relearn he will.
  • #6
  • Feb 24, 2017 11:43am Feb 24, 2017 11:43am
Quoting COGSx86
Trading S/R strictly is like trading anything on its own(candles, volume, indicator, etc), its not gonna work!!
So do you think that fundamental trading is more profitable compared to technical trading?
  • #7
  • Feb 24, 2017 1:06pm Feb 24, 2017 1:06pm
Quoting tradel13
{quote} So do you think that fundamental trading is more profitable compared to technical trading?
Neither approach to trading is proven to be more profitable than the other. If you are a fundamental trader who knows what you are doing, you can make money. If you are a technical trader who knows what you are doing, you can also make money. Fundamental traders should rely on some sort of technical analysis concepts in order to structure their trades on where to get in and where to get out. Technical traders should have an idea of what economic data can cause what sort of reaction and whether they should stop trading around them or trade right through them or what not. A fundamental trader can be a good trader. A technical trader can be a good trader. But a great trader is one who understands both approaches to the market and can suit their trading style and strategy around both of these approaches in order to achieve the maximum gains their strategy has to offer. Knowing when to stay out is just as important as knowing when to be in. The market is not static. It is dynamic where price can move due to order flow caused by either fundamentals currently leading price, or technicals leading price, or both. It's a good idea to know about both of these market forces so that your strategy can take into account what is driving price and how you should or should not trade it.

With that being said, playing fundamentals in FX right now isn't as easy as it has been in the past due to the low rate environment and how uncertain the global climate is right now. New information keeps going back and forth with no clear trend and market participants are indecisive in how to react. A lot of key players such as leveraged funds are staying out of FX and real money like mutual funds and insurance companies are becoming a dominant force behind FX volume, but usually use FX for hedging purposes related to their equity market holdings. I'm not saying it can't be done, just that it's not as easy as it has been in past market environments.

Personally, I'd advise to learn about technicals. Then, learn about the fundamentals. Then, learn about market microstruture and order flow interaction with liquidity. Having an in depth understanding of the three can bring your trading to where it really needs to be. You can still be profitable without learning all of these concepts, but when you do understand them then you can design positive expectancy strategies and answer why they should or shouldn't work. Of course, you still need to consider risk management and psychological emotions even after you come up with a good strategy.

And to answer this threads main question, no, strictly trading support and resistance is not profitable. They are tools designed to help you zone in on key areas where price could potentially turn. That alone by itself is not enough to make you money.

Good luck!
  • #8
  • Feb 24, 2017 1:56pm Feb 24, 2017 1:56pm
Thanks for all of the well thought out responses guys, its given me a lot to think about regarding my strategy. I will be posting a chart soon on a drawing S+R I did for NZD/CAD
  • #9
  • Feb 24, 2017 2:08pm Feb 24, 2017 2:08pm
Price unfortunately does not bounce from the line you draw on your platform; it goes up becouse active and passive buyers have consumed all the liquidity (active and passive seller) available at that level; if that happen again, voilà, that's a "support". So if you really understand what a support is and the context that has contributed to create that support, and take decision (open a trade or not) using that context (not the "line" by itself) yes, they could work. But in that case you are trading the orderflow behind the support.
Sometime the horizon disappear. Twitter: @_whiteout
  • #10
  • Feb 24, 2017 2:14pm Feb 24, 2017 2:14pm
SR+Volume will work.
Forex; the game of movements not the game of candles.
  • #11
  • Feb 24, 2017 2:40pm Feb 24, 2017 2:40pm
Quoting Sajid
SR+Volume will work.
What indicator would you use for volume trading? If any lol
  • #12
  • Feb 24, 2017 2:44pm Feb 24, 2017 2:44pm
Quoting whiteout
Price unfortunately does not bounce from the line you draw on your platform; it goes up becouse active and passive buyers have consumed all the liquidity (active and passive seller) available at that level; if that happen again, voil, that's a "support". So if you really understand what a support is and the context that has contributed to create that support, and take decision (open a trade or not) using that context (not the "line" by itself) yes, they could work. But in that case you are trading the orderflow behind the support.
Do you think that S+R is created by a huge amount of money being put or withdrawn from a particular pair? I always thought that it was because huge firms and banks would keep selling or buying at a certain point to create this but I could be wrong.
  • #13
  • Feb 24, 2017 2:45pm Feb 24, 2017 2:45pm
Quoting tradel13
{quote} What indicator would you use for volume trading? If any lol
My Eyes preferably.
Forex; the game of movements not the game of candles.
  • #14
  • Feb 24, 2017 3:05pm Feb 24, 2017 3:05pm
Quoting tradel13
{quote} Do you think that S+R is created by a huge amount of money being put or withdrawn from a particular pair? I always thought that it was because huge firms and banks would keep selling or buying at a certain point to create this but I could be wrong.
What i think it doesen't matter, price goes up or down becouse, at that time, there is no more liquidity to consume.
The amount of money needed to consume liquidity at price is directly proportional to the amount of the liquidity at that level; sound so obvious but ..it isn't, think about it. Focusing on "who" is buying or selling (big bank, firm or whatever) or why, is a waste of time, you will never know who is buying and why .. and the FX market is a complex one, a lot of different subject buy or sell at some price for different reason (not necessarly to have a profit), so don't waste your time on that.
Sometime the horizon disappear. Twitter: @_whiteout
  • #15
  • Feb 25, 2017 1:01am Feb 25, 2017 1:01am
What indicator would you guys recommend to help me identify and execute trades based on S+R?
  • #16
  • Feb 25, 2017 1:18am Feb 25, 2017 1:18am
Quoting FXMasterSK
{quote} Neither approach to trading is proven to be more profitable than the other. If you are a fundamental trader who knows what you are doing, you can make money. If you are a technical trader who knows what you are doing, you can also make money. Fundamental traders should rely on some sort of technical analysis concepts in order to structure their trades on where to get in and where to get out. Technical traders should have an idea of what economic data can cause what sort of reaction and whether they should stop trading around them or trade...

I second this. Do not ask us which one is better or worse or will work or won't work... it's your money. My greatest advice to you is to learn how EVERYTHING works and decide for yourself. Both Technical Analysis and Fundamental Analysis can be useful tools to an Adept. But only a Master who truly understands the craft and exhibits dedication to his art can ever lose himself to the flow and reliably create one masterpiece after another.
"The fun is in the hunt. Not the kill."
  • #17
  • Feb 25, 2017 1:20am Feb 25, 2017 1:20am
S/R is really pure BS, but you can make a shitload of money meanwhile, it you enter at these otherwise useless lines. Most people will be happy with some lousy 10-15% a month. Not me. I aim higher. 20-30% a day minimum. Anyways.

Just find a smart way to flip it over. Sometimes, depending on how you widen it, it might take 30 flips. I have traded few times close to 60 flips. How do you handle that? Your system must flip in at least 33% of the times at a positive pips value. 67% can be at a negative pips value. So, 33% positive flips. Otherwise, if you only flip negatively, you cannot face that many flips. Even 20 might wipe you out...

That's an exit plan. You need a good one. Weather you aim high or low (10%/month), a good exit plan you will need. So far I am unable to find a good exit plan for my high expectations, only for the stupid 10%/month I have one, but I am working on it...
Maadik Hugiis. IQ 69.
  • #18
  • Feb 25, 2017 1:27am Feb 25, 2017 1:27am
Quoting MoneyZilla
S/R is really pure BS, but you can make a shitload of money meanwhile, it you enter at these otherwise useless lines. Most people will be happy with some lousy 10-15% a month. Not me. I aim higher. 20-30% a day minimum. Anyways. Just find a smart way to flip it over. Sometimes, depending on how you widen it, it might take 30 flips. I have traded few times close to 60 flips. How do you handle that? Your system must flip in at least 33% of the times at a positive pips value. 67% can be at a negative pips value. So, 33% positive flips. Otherwise, if...
Then what strategy do you prefer?
  • #19
  • Feb 25, 2017 1:29am Feb 25, 2017 1:29am
Quoting tradel13
What indicator would you guys recommend to help me identify and execute trades based on S+R?
In my days I have seen only TWO good PUBLIC indicators that really works great. Only two. All the rest is just pure crap. This one (daily breakouts) is fantastic, if you find a way to use it right.
Attached File(s)
File Type: mq4 dayHL-NoSunday.mq4   7 KB | 1,221 downloads

Vertical S/R is also important. They call it trend lines. This one is really very good. Good luck.
Attached File(s)
File Type: zip trendline-indicator.zip   8 KB | 1,561 downloads
Maadik Hugiis. IQ 69.
  • #20
  • Feb 25, 2017 1:31am Feb 25, 2017 1:31am
Quoting MoneyZilla
{quote} In my days I have seen only TWO good PUBLIC indicators that really works great. Only two. All the rest is just pure crap. This one (daily breakouts) is fantastic, if you find a way to use it right. {file} Vertical S/R is also important. They call it trend lines. This one is really very good. Good luck. {file}
Thanks for the info, much appreciated
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