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Trade
How to trade from support and resistance
Price levels remains one of the most popular tools used by traders in the financial markets. There are various theories and techniques of application-level markup, for instance, you can remember about Murray and his method of demarcation.
I'll tell you what the levels of support and resistance, where to learn trade with their application and give examples of strategies that use these tools.
To mark the levels on the chart can be using one of the various methods of determining the position of price lines. In addition to manual marking, there is another option to use a special indicator that is able to automatically applying the code laid down in the terms and conditions, to distribute according to the schedule the desired support and resistance.
Strict definitions of support and resistance on a price chart there, so I have to "invent" their own:
Support - the level below the current market price values formed by one or more significant local minima.
Resistance levels located above the current market price values formed by one or more significant local maxima.
Ways to determine support and resistance on the chart
For marking on chart some traders use specialized indicators which I mentioned above. In this case, the issues associated with finding levels of support and resistance disappear by themselves. Let's see how the schedule may look like on one of the following indicators:
The indicator of price levels
This algorithm works in MetaTrader 4, available for free download:
Now go to the principles of support and resistance in Forex without the use of auxiliary programs. What is needed, not easier to use one indicator? First, there are various methods of demarcation graphics that are simply not automated, and secondly, automatic systems to determine price boundaries sometimes make mistakes, due to the simplicity of their algorithms. In such situations, the trader can easily notice that the indicator places level in the place where it is clearly not.
First on the chart identifies the most significant local maxima and minima:
Doing layout graphics
Their search is often subjective, but it's the extremes, after the formation of which the price quickly returns to the previous position. Such local highs and lows often look "sharp", they have, as a rule, does not happen, "marking time" rates, as you can see here:
Looks like the resistance
Each found in the market the price barrier is gradually disappearing deeper into the story, and then it loses significance. His shift come other levels, the more relevant that takes into account a "market". The question of assessing the relevance of price levels is very interesting and has been used by experienced traders but details about it will not now, as this material is seen on the course in Gorzewo Vladimir.
Of course, there are situations when the presence of the price level in the market is ambiguous. In this case, some speculators will say that you need to place, for example, the level of support, while others will insist that no meaningful price border here.
How to estimate price levels
Such a feature of any subjective method of analysis of the market, this has to either accept or create custom rules allowing to uniquely determine the support and resistance. This is not just a visual assessment of the situation, and determine if the levels using the selected rules (a system approach).
A method of finding levels and trading strategies
Not every novice trader from good to define levels of support and resistance on Forex chart. The can help the standard ZigZag indicator available in the popular MetaTrader 4 terminal. Using it is very easy to find local maxima and minima, which facilitates the task of the trader to define levels:
Ways to determine support and resistance
In the program settings you can set the sensitivity of the indicator that will help you choose the best for yourself variables under which the algorithm finds really important, from our point of view, level. Look at the same market situation, but with different settings ZigZag:
The study of price levels
How to use trading levels
There are other ways to determine, formed on the chart a local maximum/minimum. For example, for a certain number of candles X price needs to go down (for example, the resistance level) at a distance of Y points.
How to trade on support and resistance
If the price in the allotted time was not at a specified distance down, then the trader believes that the level has not formed yet. It is not seldom that the first signs of the formation of, for example, the resistance are incorrect and the price soon begins to grow again, not even having time to really fall. Here you can remember about retaste levels about what was discussed in a previous publication.
Today, there are a huge number of strategies used to trade levels of support and resistance. This is due in part with a large number of ways to define important milestones. If You are just starting to get interested in this subject of trading, I recommend to pay attention to these two strategies:
Breakout strategy
Minute strategy
Trade from support and resistance remains very promising, because the market is arranged so that there is no escape from changes. The advantage of the market shifts to the sellers, it returns to the buyers, and such fluctuations will inevitably form the price levels. This subject is very extensive and deserves careful study on the part of traders.
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| Category: Forex | Added by: (05.11.2017)
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| Views: 304
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