Support and Resistance
Support and resistance (SR) levels are one of the main tools for both fundamental and technical analysis used by both beginners and quite experienced traders besides many other tools even if the trader has extensive trading experience. So why have these simple lines become so widely used by investors? Let's think about this together.
These SR levels individually allocated conditional areas on a certain currency timeframe, bounded by price extremes; highs and lows, often represented as lines, but it should be represented on the chart itself to calculate all the risks and correctly place orders. SR level shapes will be completely different if represented on different timeframes of the same currency and period of time. On large timeframes, such as H1, H4, D1, and larger, SR lines are more reliable and less likely to be fake or misleading, not like those on M1, M5, or M15. They can be drawn either by candlestick bodies or by their shadows and no specific rules exist about that, there is still dispute among experts about which of them is better and more accurate.
The psychological component of support & Resistance levels is the key to understand how they are formed and how to they can be used. One of the following three conditional groups if prevailed in the market, would form a trend in it:
- Bears (open sell positions)
- Bulls (open buy positions)
- Undecideds (not yet on the market)
On a certain chart when the price touches pre-drawn support or resistance line, it probably either turn back away from that line or passes through it, and by refining the expected possibilities in this situation, 3 types of trading can be relied on guided by the Support / Resistance levels:
- Assuming a rebound from levels (range trading).
- Assuming a level breakout (breakout trading).
- A mixed type of trading (using both strategies alternatively, depending on the current market condition).
Each of these 3 Support / Resistance levels guided Forex trading strategies has been transformed into automated forex systems by Forex robot developers, and below are reviews of some of them that proved to be profitable:
No martingale, grid, averaging or arbitrage tactics are involved. Its trading frequency average is about 4-5 trades a day.
Channel Trader PRO not a high frequency scalper as on average it trades about 200 to 300 times a year. It focuses on short term trades to smartly enter and leave the market harvesting its profits with limited exposure to rapid market movements.
It implements the successful Forex trading behaviors including emotion, verifications, trade management, money management, and market awareness into its trading strategy.
Vortex Trader PRO uses a MySQL database to broadcast trading signals, it trades around the clock as was proved by its live performance statements with an average win of 11 pips and average loss of 21 pips.
It trades using baskets with a limited amount of trades achieving good profit on average 30+ pips, the positions are entered at the bar open with dynamic StopLoss and TakeProfit values.
Tags
Risk
Forex trading can involve the risk of loss beyond your initial deposit. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Forex accounts typically offer various degrees of leverage and their elevated profit potential is counterbalanced by an equally high level of risk. You should never risk more than you are prepared to lose and you should carefully take into consideration your trading experience.
Past performance and simulated results are not necessarily indicative of future performance. All the content on this site represents the sole opinion of the author and does not constitute an express recommendation to purchase any of the products described in its pages.
