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Is strictly trading support and resistance profitable?

  • #101
  • Feb 27, 2017 1:32pm Feb 27, 2017 1:32pm
The mathematical principles that 9.999^Infinity = 1 or 3.333^infinity = 1/3 is what seperates mathematicians from physicists. Or the principle that 0 = 0 (which immediately gets invalidated by schrodinger's cat and the various quantum theories)
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Mathematicians accept those as necessary mathematical approximations. Physicists seek a better way to explain reality. There-in lies the flaw of a mathematical analysis of Martingale; it presumes the parameters of space and time. It presumes that only two binary options exist and that they are both equals. It presumes that 2+2 = 4 when in reality 2+2 = 4 AND 2+2 = 5.
"The fun is in the hunt. Not the kill."
  • #102
  • Feb 27, 2017 2:41pm Feb 27, 2017 2:41pm
What do you guys think would be a good MA time frame for 1 hour and 30 min charts
  • #103
  • Feb 27, 2017 2:43pm Feb 27, 2017 2:43pm
Wait, so if prices are made by banks and big firms, why can't we use simple S+R lines. Are we just trying to buy when everyone else is trying to sell and vice versa. Would this strategy work, buying the opposite of the majority of people base on S+R lines?
  • #104
  • Edited 3:01pm Feb 27, 2017 2:50pm | Edited 3:01pm
Quoting tradel13
Wait, so if prices are made by banks and big firms, why can't we use simple S+R lines. Are we just trying to buy when everyone else is trying to sell and vice versa. Would this strategy work, buying the opposite of the majority of people base on S+R lines?
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No, that would not work. Especially if you don't know what's the banks/firms and what's 'the majority'
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You can use simple S&R lines. Go look at the monthly charts, put down your positions, and check back with us once a month. Make sure you use an insanely small % of your account... if you do it properly then you'll definitely have a higher APR than the banks offer. But traders don't earn 5-10% a year. They earn that daily. That's because they move faster than the banks and with more precision.
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If you trade 1-step ahead of the banks and 1-step ahead of the other traders then you'll be 100 steps ahead of everyone in no time at all.
"The fun is in the hunt. Not the kill."
  • #105
  • Feb 27, 2017 4:02pm Feb 27, 2017 4:02pm
Quoting Redeflect
{quote} No, that would not work. Especially if you don't know what's the banks/firms and what's 'the majority' You can use simple S&R lines. Go look at the monthly charts, put down your positions, and check back with us once a month. Make sure you use an insanely small % of your account... if you do it properly then you'll definitely have a higher APR than the banks offer. But traders don't earn 5-10% a year. They earn that daily. That's because they move faster than the banks and with more precision. If you trade 1-step ahead of the banks and 1-step...
So how can you trade 1-step ahead of the banks?
  • #106
  • Feb 27, 2017 4:21pm Feb 27, 2017 4:21pm
Skeptical about EUR/GBP. Only buying if it hits the support and clearly does not break it. What do you think?

lol, I'll make the chart bigger next time. My bad

Also, why did this false breakout happen? I realize this is the thing that kills S+R trading. Any suggestions to avoid trading on a false breakout?
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  • #107
  • Feb 27, 2017 8:02pm Feb 27, 2017 8:02pm
Quoting tradel13
{quote} So how can you trade 1-step ahead of the banks?
 
Economy of size.
"The fun is in the hunt. Not the kill."
  • #108
  • Feb 27, 2017 8:06pm Feb 27, 2017 8:06pm
Quoting Redeflect
{quote} Â Economy of size.
Huh?
  • #109
  • Feb 27, 2017 8:10pm Feb 27, 2017 8:10pm
Quoting tradel13
{quote} Huh?
 
The banks can only move/respond to information so quickly. It's actually their job to respond slowly and buffer the economy. All you have to do is know which way they're going and avoid smashing into them.
"The fun is in the hunt. Not the kill."
  • #110
  • Feb 27, 2017 8:23pm Feb 27, 2017 8:23pm
Quoting Redeflect
{quote} Â The banks can only move/respond to information so quickly. It's actually their job to respond slowly and buffer the economy. All you have to do is know which way they're going and avoid smashing into them.
By trading on news before they do? for example ofc
  • #111
  • Feb 27, 2017 9:02pm Feb 27, 2017 9:02pm
Quoting tradel13
{quote} By trading on news before they do? for example ofc
 
That is one way. But that often comes down to guesswork. Another method is fundamental speculation. Another way is to feel for their movements after they've started to move and respond before they're done moving.
 
This is the game we play. I can tell you though that just about everyone learns how to read S&R levels... and most of us are going to lose our money.
"The fun is in the hunt. Not the kill."
  • #112
  • Edited 11:56pm Feb 28, 2017 4:19am | Edited 11:56pm
Quoting tradel13
Wait, so if prices are made by banks and big firms, why can't we use simple S+R lines. Are we just trying to buy when everyone else is trying to sell and vice versa. Would this strategy work, buying the opposite of the majority of people base on S+R lines?
OK, so you are asking all of the right questions BUT .....
you need to seek answers for yourself. Do not expect your answers to come from here.
PS. If you are trading SR levels, NO indicators will help you. They all lag behind to some extent. They can only work on trades already placed, and then process the numbers. This is not a criticism of indicators, it is simply one of the limitations of them.
What indicators will NOT tell you is how many traders are sitting on the side lines, when they will enter and what direction they will take.
Can you see my point? These are 3 significant details to consider.
Best you find a currency pair that has significant daily range, is a mainstream pair that will respond to news releases, has an affordable pip spread and trade this on demo for a very long time.
Keep accurate records of the trades you take, the trades you see and do not take and try to establish why price moved when it did in the direction it took.
If you are going to trade with the big kids, you need to think and act like the big kids.
The rewards lie ahead of you.
BTW, going against the big kids will just end in a bloody nose.
Cheers, H
  • #113
  • Feb 28, 2017 6:12am Feb 28, 2017 6:12am
Quoting FXMasterSK
{quote} Congrats, but you're not strictly trading support/resistance as the question was asking. There seems to be price action and money management/probability techniques thrown in there. So my opinion remains unaltered that strictly trading support/resistance on their own IE going long at every support and short at every resistance is not consistently profitable. However, that isn't to say support/resistance used as a tool with other concepts can't be profitable as I do the same.
That I totally agree with!
  • #114
  • Feb 28, 2017 11:33am Feb 28, 2017 11:33am
Quoting Aich
{quote} OK, so you are asking all of the right questions BUT ..... you need to seek answers for yourself. Do not expect your answers to come from here. PS. If you are trading SR levels, NO indicators will help you. They all lag behind to some extent. They can only work on trades already placed, and then process the numbers. This is not a criticism of indicators, it is simply one of the limitations of them. What indicators will not tell you is how many traders are sitting on the side lines, when they will enter and what direction they will take....
NOt disagreeing entirely, but....yes indicators are lagging, but if you have 5 different indicators pointing at oversold, MAs confirming it, RSI, Stichs as well...3 out of 4 times, the next move is arguably quite predictable. SO yes, indicators ARE lagging....but that does not mean they don't point the way.
May the pips be with you
  • #115
  • Feb 28, 2017 7:29pm Feb 28, 2017 7:29pm
There is a reason that they are called indicators and not exacts.
They are only 1 tool in your toolkit. They should not over-rule your observation and feel for the market.
  • #116
  • Feb 28, 2017 10:12pm Feb 28, 2017 10:12pm
Yeah, I'm starting to see that price action is more accurate than indicators because they lag
  • #117
  • Edited 11:58pm Feb 28, 2017 11:43pm | Edited 11:58pm
OK, now you're thinking for yourself.
Consider this: Who supplies your indicators? Why would your broker supply indicators that worked? What is your relationship to your broker? What is his motivation? What is your motivation? This one is simple. To make money. But what about the rest.

Put aside all that you have learned about trading for the moment. Do not scrap it. It is all valuable.
However, you started this thread because you were looking for a fresh approach. Be prepared to think very differently about what makes a successful trader. It is not about indicators.
These are supplied by brokers to keep you in the game so that they can take money from you over an extended period of time. They want you to lose slowly!

I trade a system that makes extensive use of indicators - ALL of which are CUSTOM.
However, before I consider a trade I look at:
1) The month of the year
2) The week within the month
3) The day of week
4) The time (hour).
All of these effect my trading decisions.

You need to consider why I consider these to be important.
Consider the business cycle - the Northern Hemisphere business cycele.
Consider that 90% of the world's population live in the Northern Hemisphere.
I live in Australia but I do not trade AUD.

Think in terms of EVENTS. Vertical events and horizontal events. SR levels are examples of horizontal events. News releases are examples of vertical events.

If you can enter trades with the alpha dog you are much more likely to succeed.
Work out who are the alpha dogs and when they are likely to be trading.
Much of this is guess work but you will realise that your guesses get better and better over time.

Serious traders take all of these things (and more) into account before placing a trade.

In spite of people saying that back testing does not work, you need to look back at big movements in the market and ask yourself "how could I have seen that in advance?"
BTW: correct back testing works if you can write your own programs to do it.
I do not trade using EA's as they do not work as well as my own judgement of the situation. How can an EA take into account the stuff I have described here?
However, I write EA's to test my custom indicators and trading strategies.

You don't have to trade like me but you need to create a trading methodology that works for you. This is much more than a technical indicator based system.
Welcome to your journey.
  • #118
  • Mar 1, 2017 1:31am Mar 1, 2017 1:31am
Tradel13 try and stear clear of the lower charts for the time being. use 4h and daily charts to trade S+R. You'l find they are more reliable than the lower time frames. lower timeframes will get you in a more profitable position in your trades but not by much. its not worth the stress when you get caught in the chop and noise for a few extra pips.
  • #119
  • Mar 1, 2017 3:10pm Mar 1, 2017 3:10pm
trading any technical indicator on its own is more or less a lucky dip. No 2 moments in the market are the same so how do you know if any given level will hold or break? you can't. I spent a year wasting my time on technicals and only when i started trading fundamentally have i found a formula for success. The only problem now is funding which i plan on doing every payday
  • #120
  • Last Post: Mar 2, 2017 2:35pm Mar 2, 2017 2:35pm
Thanks for all the great answers so far
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