Hello, My trading experience is in the arena of trading resistance and supports that I draw on the chart daily and day trade the next day. For the past two years, I have intraday traded breakout of support and resistance on the small time frame charts (3-5 minutes). I would wait for 1-2 bars to get above resistance, then enter long. I would wait for 1-2 bars to get below support, then enter short. Success has been in minimal and still testing this approach. I would like to extend my trading learning/experience to trading ranges of support and resistance, not just breakouts. In addition, I would like to know how to sell resistance and buy supports. I will be practicing trading ranges and selling resistance and buying supports, and thinking of some methods to back test. Questions: 1. Can you please recommend a good book/reference on price action and trading ranges (support and resistance)? 2. Can you please recommend a good book/reference on how to sell resistance and buy supports? 3. Is selling resistance and buying supports considered counter trend trading? I am not sure I understand the difference. Example: Below is a range (I think). I see the price dropping a resistance and rising at a support. Should I just put a sell limit at resistance and buy limit order at support? Would this be counter trend trading? Thank you
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You seem to understand what support and resistance lines are, there is no point in buying a book because it won't get a whole lot more advanced than that, nor should it. If you haven't had success on the lower time frames go higher, often it helps people who are struggling. Try to be picky about where you place your S/R lines, you can put 10 lines on a chart and chances are price is going to show a pin bar on one of them. The more price has reacted to the area the better. Other than that I can only say that the entry and exit is only a very small part of what makes a trading strategy successful.
Thanks nickynoes. I agree, I believe I do a good job and drawing support and resistance. Thanks for the advice.
I can't help with your first two questions, but can try the third ... Not really, no: it's primarily considered "identifying reversals", and secondarily (perhaps, the way you describe it) "trading ranges", which conceptually overlaps with that anyway, on a smaller scale. What you describe, overall (which reminds me a little of "pin-bars on the line") is certainly in itself a valid and reasonable way of trading, together with some price action knowledge and experience.
Trading the ranges and trading breakouts are both useful depending on the type of market we are trading in. In more recent years, with suppressed volatility I have found that in certain markets, breakouts hold less (fake breaks) and are much more mean reverting. Therefore it is better to play ranges. Of course you will need controlled risk management and your trading plan should adjust for these parameters. I can't really suggest any books but I've come across plenty of stuff online over the years. Just google it
1. You may be interested in Trading By Price. It's based on Wyckoff's work and I found it invaluable. 2. Book? No. However, there is an excellent thread on applying Wyckoff's approach *here*. That approach was largely about determining the line of least resistance, the balance and shifts in balance between buying pressure and selling pressure, trends and ranges and trading each to the best result. 3. No. Support (the level at which buyers find value) and resistance (the level at which buyers decline to pay the ask) imply ranging. Ranging and trending are two different states (fortunately they're the only two states you have to worry about). Some consider moves between support and resistance to be trends, but this pretty much defeats the purpose of using the term "trend" in the first place. A large part of the confusion lies in the failure of the trader to decide upon his frame of reference. An intraday trader, for example, may be trading ranges and trends and breakouts and reversals that aren't even visible to someone trading an hourly chart, much less a daily chart. Does that mean that those trading ranges, etc, don't exist? Technically, they do. Practically, they don't, not if the trader in question doesn't even see them. Using the NQ as an example, it ranged from July 2015 for nearly a year and a half, until the election, and the range was nearly a thousand points wide. Was this trending? No. Was it not worth trading simply because is was ranging? Someone using monthly charts might argue that it was not. Someone using daily charts would be salivating at the prospect. It will be important for you to decide whom you want to trade with. Nearly all daytraders divide their day into segments: 1m, 5m, 15m, etc. If you want to trade with 5m people, for example, you'll have to pay special attention to 5m charts so that you know what they're looking at and trading. If you want to scalp, you will again have to pay special attention to what they're looking at and trading. And if you happen to be looking at a point or level that scalpers and 5m people and 15m people and daily people are all looking at simultaneously, be prepared for a hell of a move given the number of people who will be trading alongside you.
Do you ever profit by this "range bond" strategy (sell low buy high) ? If not, PM me and I will tell you why. Don't want to comment here as we have too many idiots and person which special interest such as education seller, broker/bucket shop/trading related firm poster, loser that pretend to millionaire traders, website promoter and etc will try to twist my comments and confuse any innocent newbies.