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Why does Support and Resistance doesn't work
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Why does Support and Resistance doesn't work

  #11 (permalink)
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It's not just support or resistance but basically whatever it is that you decide to use as a strategy will seem to work and then not work. understanding why this is so and what to do about this natural phenomenon is the key. Here goes and I'm not playing with words, words are the play. You can' have nothing without something or something without nothing. The truth of nothing and something is that they become each other. A becoming Is a becoming of a becoming. Understand the paradox which is the result. Even if your right you may be wrong. Remember that when you remember you can only remember if you never really forgot. if you really forgot it would be impossible to remember. What goes up must come down but it must go up again because what comes down must go up. So how can you pick direction? It can be done in a limited sense but It is not necessary and you don't need to know how. The key is not to try to pick direction because the picking of direction is what creates direction so it is quite literally impossible to predict direction the way you are trying to predict direction. There is quite literally nothing there to predict as nothing has actually happening which can lend itself to prediction, there is no linear process capable of being predicted. Yet following a simple system which will work if followed is near impossible to do, at least for most. In fact, they will not even be capable of realizing that it will work. But Why? I'll tell you why? Because they are not trying to make money but are trying to stroke the ego. Your using trading to make yourself feel good about yourself and it's an addiction a bad addiction which will not be easy to break. You have to separate your emotions and sense of self worth from trading or it will be impossible to do the right thing. It won't be easy to change if you are suffering from this. I know this personally. Funny how trading seems to attract such individuals. So what to do...and I am talking to myself here.
Remember this...... you were attracted to trading in the first place not to try to make money but to prove something to yourself. You must turn this on it's head. Now use trading as an opportunity to grow and let go of the ego. Don't ever forget this. Your main goal in trading is not to make money but to grow as an individual and free yourself from your limiting ego. the moment you forget and focus more on the money you will stumble. Make it your goal to feel good when you do the right thing even more so than when you made money. Feeling good has to be connected with acting correctly not glorifying your ego by winning or proving that you were right. Effort always has to be directed in this right direction and constant self reflection will be required. The method you will use will to make money in the markets is not important and will appear to you without effort when you are emotionally in the right place. if you still think it's important the ego is still in the way. Try to feel good because it just feels good to feel good? Let your curse be your blessing. All the best.

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  #12 (permalink)
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Fxfutures1976 View Post
Support and resistance works 1'000'000% most accurate in Currency more than any other indicator or oscillator on the market.
If you know where to look for it and how to use it.

I agree 1,000,000%

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  #13 (permalink)
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Big Mike View Post
The answer is in the random line thread, unless you purposely choose to ignore it.

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Hey big mike New to the forum, and it's great !! Sorry, but can you please explain what you mean in this quote? What thread are you referring to? Or am I just misinterpreting/not understanding what you're saying?

Btw. I've found support and resistance to be very effective for me, and I'm looking at going live soon. I think this thread was started as a blanket statement, but it seems quite misleading and could be for many people. I've been trading s&r on sim, it has worked, is OP implying it doesn't work?

To me it seems not all support and resistance opportunities are created equally. The ones who have good money management and take the better opportunities are the ones who succeed don't you thinkk

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  #14 (permalink)
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Also, not all traders trade price action. You're making the assumption that everyone does, but a good number of inexperienced traders use indicators over PA


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  #15 (permalink)
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kentonpalmer7 View Post
Hey big mike New to the forum, and it's great !! Sorry, but can you please explain what you mean in this quote? What thread are you referring to? Or am I just misinterpreting/not understanding what you're saying?

Try this

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  #16 (permalink)
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kentonpalmer7 View Post
Hey big mike New to the forum, and it's great !! Sorry, but can you please explain what you mean in this quote? What thread are you referring to? Or am I just misinterpreting/not understanding what you're saying?

Btw. I've found support and resistance to be very effective for me, and I'm looking at going live soon. I think this thread was started as a blanket statement, but it seems quite misleading and could be for many people. I've been trading s&r on sim, it has worked, is OP implying it doesn't work?

To me it seems not all support and resistance opportunities are created equally. The ones who have good money management and take the better opportunities are the ones who succeed don't you thinkk

Here is the link to the random line theory thread: https://futures.io/traders-hideout/7364-random-line-theory.html

I personally do not place support/resistance or pivots on my charts. I do look at the volume profile though.

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  #17 (permalink)
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JamesPowell View Post
supposedly it is statistically correct 90% of traders loose money trading. All traders loose money. I think the 90% totally fail, give up and wash out of the game.

I do not think this is why support and resistance does not work though.

Its more probable that support and resistance not working and most other methods of trading actually not working is actually why 90% of traders fail.

There are volumes and shelves and entire sections of libraries teaching things, specifically to the traders question, teaching things like support and resistance and how it made them wealthy and how to do it and the like. Some of these books upwards of $60 and better ( its no wonder how the author got rich ). Most if not all the information, sometimes all of the information in these books is totally wrong and misleading. This is most likely why 90% of screen based, retail traders fail. But this is not why Support and Resistance fail.

The reason support and resistance fail is 100% mathematical. Simple arithmetic.

https://www.tradingview.com/x/h3zMtzLQ/

The drawing above illustrates and defines support and resistance. Perhaps not as is done so in so many books. But still this is a real picture of support and resistance.

once the unfilled orders are actually fill then the level is no longer valid. Its simple math.

I have read traders saying the more times a level is tested the stronger it is...totally false and mathematically illogical. What is logical is that the stronger a level, meaning the deeper the market ( the more unfilled orders at that level), the more "tests" it will withstand before failing. However there is no real way to know how deep a market really is at any given level. No, volume does not help either because volume is a tally of transactions already made and in no way gives any clue as to market depth. No, order book doesn't help either because while it does show some orders on the books its the orders that are on the books and not shown that make it useless as well.

If we, as traders, define and understand Support and Resistance as simply a level where unfilled orders are likely to be found, then figure out how to recognize these levels on a price chart and then, then perhaps we will see that quite often Support and Resistance actually can work for us rather frequently.

https://www.tradingview.com/x/yM2Y95Vw/

I scaled down from the original time frame pictured higher up, down to a 15 minute scale so we could better understand.
An X-Ray if you will. The green level was what the "Supply/Demand" gurus commonly call a "Drop-Base-Rally demand zone. We can see it was quickly returned to and worked beautifully. However at the same level about 24 hours later when price returned to this same level notice that it actually took quite the beating and gave another bounce even.

However it bounced into what those same "Supply/Demand" gurus call a "Drop-Base-Drop" supply zone and from there price pushed farther down easily penetrating what was previously "Support" and by some definitions a strong one too.

https://www.tradingview.com/x/L9oW0M3Z/

and one final picture pointing out that on the same graph some similar price structures that actually seem to not have worked out so well. My point with this last picture is that charting is not trading by any means. So if we as traders subscribe to support/resistance or supply/demand or fibs or VWAP or anything else none of these structures or methods will ever work 100% of the time. Good trading is what keeps us alive in this business where the institutions have all the money and all the answers and can see all the orders, ours and theirs while we, screen based retail traders, can not ever really see any of the orders.

good luck my friends.

99% of us fail because we simply are not allowed to have the information we actually need in order to succeed. Fact is, that privileged information is forbidden by laws, rules and regulations for us retailers to have.

(not sure if this is acceptable but if anyone interested in the charting service I can send a link. New traders can get them free and subscribe to them later on, or not)


We must be like the fountain or spring that is continually emptying itself of all that it has and is continually being refilled from an invisible source

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  #18 (permalink)
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These concepts of "Random Lines" and what does and does not work has been debated to death here before. My own view as to what works and doesn't work is more nuanced than a yes or no.

I would venture to say that if you applied a rigorous mechanical test of "every signal" generated by an indicator, trendline support/resistance or whatever in the manner Adam Grimes does, just about everything would be random, that is the hall mark of an efficient market. That is why he can say that random lines on a chart work as well as actual trendlines.

But as discretionary traders we do not have to take "every signal" we can pick and choose when to take a trade. As an example as a PA trader I will not take a trendline touch signal after a three push wedge unless the trend is very strong. There are other examples depending on how one trades. The point is we can wait until the odds are in our favor based on multiple inputs and experience of the market. One only needs to be right 51% of the time to become rich in the long run.

So in my opinion S/R lines work if used with discretion, most inexperienced traders are looking for the holy grail where they can say if this happens then do that and collect the winnings at the end of the day. Unfortunately it does not work that way.

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sharmas View Post
A thought and need some guidance and wanting to provoke some in-depth thought

We all use some form of Support and Resistance or Pivots

So why does it not work for us and for some it certainly works.

Are we putting the cart before the horse ....Most of us are trading electronic market and which is open nearly 23 hours over 5 days.

The exchange is open for approx 7 hours a day over 5 days

Are we trying to fit in our template with our pivots to match the exchange/institutional levels.

If we all used the same opening times of the market and daily pivot then why doesn't our levels get respected.

Anyone willing to share the in depth knowledge

Additional input

Maybe a better question
When does the Electronic Market open and close as this may hold the key to the Pivots and maybe we all are putting our pivots on the exchange opening period and hence it doesn't work.



Sharmas

I'm sorry but support and resistance does work. It's you my friend. It takes a level of skill you currently do not possess. If I was to attempt some type of surgery brain, heart or abdominal I could easily proclaim...... Surgery does not work! Yet the skill and competent physician performs it everyday.

You can't just use support and resistance however you like in this or that situation and except it to work. Just as the surgeon needs the proper environment, namely a sterile one, for the surgery to have a chance to be successful, as well as many many other factors, the trader needs the same correct environment and many other factors to be in place as well.
  1. Platform profecinecy
  2. Order type knowledge
  3. Patience, courage
  4. Suifficient capital
  5. Market context
  6. Capable tools ie computers, battery backups etc
  7. Fast relible internet
  8. Trading industry knowledge depth and breath
  9. Trustworthy broker
  10. Physical heath
  11. Error free execution ...etc etc
Experience comes into play here a GREAT deal.

Pivots, Floor Pivots are calculated based off some formulas. Just plug in some numbers and out pops other numbers that somehow will tell you where the market is going to turn around....... The market is nothing more than people, yes even black boxes, algos, bots, IA systems etc... did not create themselves. How can a pivot formula product, sum, quotient or result account for the behavior of millions of souls?

Support and resistance works some probability of the time. I contest your sample size is infinity....literally! to small.....as mathematical probabilities are base on infinite sample size.... Flip a coin enough (as x---->∞) and obtain heads 50% tails 50% ...flip it 1000 times and perhaps get 43% heads 57% tails.

If you trade your idea of support and resistance for 2 months and found it did not work well....
  1. You don't have the necessary skill level
  2. even if you did, judging it as "doesn't work", is premature

Support and resistance work for some because they know how and when to apply it together with all its nuances. And not for others for lack and want of knowledge and training. Period.

Ron

We must be like the fountain or spring that is continually emptying itself of all that it has and is continually being refilled from an invisible source

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Buy Low And Sell High (read left to right or right to left....lol)
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  #20 (permalink)
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I think S/R does work. You must understand that it is only part of the picture. Fundamental analysis and technique factor in to this also. For example, you can draw all the levels that you want on the ES prior to an FOMC announcement. They are worthless. That's a fundamental issue. Or you can draw levels in a high liquidity market and they are very valuable as Potential trading opportunities. Same levels in two very different market conditions.

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