Trading Resistance and Support Levels

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Support and Resistance are two major pillars used in developing trading strategies for all sorts of investment decisions. To become a successful trader, you have to consider these two parameters in the decision-making procedures; hence they have to be included in trading options too. A resistance level is generated when prices fail to rise beyond a certain price level for at least twice.

By this, it means the prices cannot increase further unless the buyers change their opinion. The more the asset tries to pass through the resistance level, the more valid it becomes. Support is a price level below which an asset or a currency pair fails to fall.

So, in a way Support is the floor and Resistance is the ceiling and the area between the two is the room. Both the parameters will move between these two levels unless a breakeven is reached in any one of the directions. Support and Resistance offer the traders numerous clues about how to trade in the market and ways to survive losses.

Being one of the most popular technical analyses, it is very simple to comprehend. The rationale behind the Support theory is that as the price becomes closer and closer to Support, it becomes cheaper and cheaper. Now, from the point of view of sellers, the deal becomes less and less lucrative as the price has fallen so much. Sellers will find that the deal is of no use, thus forcing buyers to outdo sellers and this scenario will prevent the price from falling below the Support.

Situations may arise where the price may go below Support and sellers can overcome buyers. This kind of behavior will reveal that inclination towards selling is more than buying. The rationale behind Resistance theory is that as the price comes closer to Resistance level it tends to be higher and higher making sellers more likely to sell their products. However, as the prices rise so much buyers will be less inclined to buy and hence another situation where sellers will outdo the buyers will be created.

Here, the price will be prohibited from going upwards. Just like Support, Resistance may also not hold its ground in all situations. The buyers can win over the sellers and when the Resistance is broken, the buyers will be more than willing to buy at higher prices and the prices will not come down easily. In a nutshell, the traders who precisely understand the rules of Support and Resistance levels perform better in the market as they have more confidence and understanding power to manage their portfolios for easy gains.

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23 comments Masa pasaran perdagangan binariman

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For one, I simply felt like breaking things up a bit for my own enjoyment. Therefore, introducing some second trades into my blog can serve to lend some advice on how I would approach these.

Also, it is more difficult to be as accurate with these trades as the minute trades, due to the inherent level of noise on the 1-minute chart, in my opinion. Find support and resistance levels in the market where short-term bounces can be had.

Pivots points and Fibonacci retracement levels can be particularly useful, just as they are on other timeframes while trading longer-term instruments. Take trade set-ups on the first touch of the level. For those who are not familiar with the way I normally trade the minute expiries from the 5-minute chart, I normally look for an initial reject of a price level I already have marked off ahead of time.

If it does reject the level, this helps to further validate the robustness of the price level and I will look to get in on the subsequent touch. Expectedly, this leads to a lower volume of trades taken in exchange for higher accuracy set-ups. To provide a baseball analogy, a hitter who normally maintains a batting average of.

On the other hand, in that same span, he might hit. Continue to consider price action e. But without further ado, I will show you all of my second trades from Monday and I how I put all of the above into practice.

To avoid confusion, I will briefly describe each trade according to the number assigned to it in the below screenshots. On the first re-touch of 1. Similar to the first trade I took a put option on the re-touch of 1. This trade also won. A third put options at 1. This trade lost, as price went above my level and formed a new daily high. Price formed a newer low at 1.

I took a call option on the re-touch of 1. Basically the same trade as the previous one. Price was holding pretty well at 1. On a normal move, I would take a put option there, but momentum was strong on the 2: Several put options almost set up on the 1. So my next trade was yet another call option down near where I had taken call options during my previous two trades. I felt this was a safer move as just half-a-pip can be crucial in determining whether a second trade is won or lost.

Call option down at 1. However, the minute after this trade expired in-the-money, the market broke below 1. This trade was a put option at 1. Nevertheless, this trade did not win as price continued to climb back into its previous trading range. I decided to take a put option at the touch of 1. This trade might seem a bit puzzling at first given a new high for the day had been established and that momentum was upward.

But by simply watching the candle it seemed that price was apt to fall a bit. It was also heading into an area of recent resistance so once it hit 1. For this trade, the high of day initially made on the 2: I had intended to take a put option at this level on the 3: And then for maybe seconds, my price feed was delayed and by the time it the connection was recovered it was over a pip above my intended entry.

I did end up using the 1. I took a put option on the touch of the level. Once again, I used the current daily high of 1.

But price busted through and this trade lost. Another fifteen minutes passed by before I was able to take another trade set-up. This time, I used 1. This trade was probably my favorite set-up of the day and was aided by the fact that the trend was up. It turned out to be a winner. For put options at this point, I had an eye toward 1.

So I decided to take a put option at the touch of 1. This trade turned out to be a nice four-pip winner. My final trade of the day was a call option back down at 1. This was another good four-pip winner. After that I was waiting for price to come up and see if 1. Also, I was feeling a bit fatigued by this point and decided to call it quits for the day. But, in general, I have faith in my strategy to predict future market direction with a reasonable level of accuracy, and my ability to apply it to any market or timeframe.

I also enjoyed toying around with the 1-minute options, as it was a new experience, and I would definitely consider adding more second option days into my regimen in the future.

Basic 60 Second Strategy My basic strategy toward second options goes as follows: Trade History Using 1 Minute Expiry 1: Put option back up at the 1. Another put option at 1. Similar to 12, I used 1. Where Do I trade?