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Support & Resistance Frustrations...

  #4 (permalink)

Christchurch, New Zealand
Trading Experience: Beginner
Platform: SC
Broker/Data: IB, BC, Dx Feed
Favorite Futures: US Equities
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Posts: 428 since Jul 2014
Thanks: 471 given, 491 received

timmbbo View Post
I hope members can bring clarity to my frustrations. I am a new trader, and I'm drawn to trading off Support and Resistance strategies. I've watched what feels like a bazillion YouTube videos on the subject, and to no surprise, some just make more confusion, rather than knowledge. I realize there's no cut-and-dry answers on these questions, but I feel stuck on these points:

- How many ticks constitute a Support & Resistance phenomena? I've watched some videos where, as soon as they get 5 ticks trading in a tight band, they declare that a S/R zone, and then base future trades upon that zone.

- How far back historically? I see some traders, when they identify a S/R, they look back historically for previous action in that zone. Well, if you go back far enough, you can find support for just about anything. What's the use of going back for historic data, when you're actually just guilty of confirmation bias?

- Time break downs? I see how traders start examining month/day/week, and then break it down into smaller segments when they find something interesting. Others just seem to dive into 1 minute / 3 minute / 5 minute charts, and identify S/R zones right from there. I'm confused on what time break down should be used.


-Asking how many ticks is like asking how long is a piece of string? Anyone who declares S/R from a 5 tick consolidation is probably delusional.

-Sure the common idea of S/R is to look back at previous structure swing highs/ lows, relative to the time frame you're looking at. However it's all arbitrary and there's an infinite amount of ways you could potential identify S/R.

-A trader might identify S/R on a higher time frame( eg 1 day) and then have a short term bias to trade in that direction intraday based off a smaller time frame( eg 15min). However another trader who takes a more quantitative approach to the market might believe that S/R on any timeframe is meaningless, and holds no statistical significance- thus has no place in trading.

At the end of the day everyone has their own personal bias that forms their perception of the market. There's not necessarily a right or wrong, it's more about what you believe in and what works for you. Just as some people are atheists and require proof, while other believe in god/s and rely on faith.

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