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Support & Resistance Frustrations...
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Support & Resistance Frustrations...

  #11 (permalink)
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mattz View Post
Watching YouTube and expecting to learn to trade right is not the right way.
There is a mix of promoters who do not trade, people who paper trade, and very seldom people with practical experience.
As a beginner you might be impressed with their "preaching", in a few years you would think other wise.

Let me give you a helping hand: Charts are like looking at earth from space while you want to get to Switzerland. Now you are asking, should I fly 50 KM to the left or the right to get there? and in reality...who knows?

What I am trying to say is that charts (s/r,fibs, etc) are not a sole tool to predict price. In fact, charts may make you take moves that would trap you against professionals. In my personal opinion you should try and develop a secondary set of tools beyond what the charts provide, which is only the setup.

I hope this helps you in your quest.

Thanks,
Matt

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why is there no "subscribe to the truth mattz says" button?

ps. appreciate all your post

cheers
Chris

Consistency over time
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  #12 (permalink)
Market Wizard
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chr1s View Post
why is there no "subscribe to the truth mattz says" button?

ps. appreciate all your post

cheers
Chris

I appreciate your kind words. I always recommended to my guys to learn order flow, and read about behavioral finance. It will give you a better insight about concepts of "fear and greed".
Many of the new traders treat it as a moral value, but it's actually the excessive parts that affects and cloud our judgment.

Good Luck!

Matt

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  #13 (permalink)
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Fadi View Post
Search for Adam H Grimes on YouTube. You will find a free webinar I guess under the BigMike Trading channel.
Jut watch it to the end!! It is a relatively new video on the channel, and it will explain to you many of your frustrations using this kind of technical analysis...

Ok here's the link
Sorry was on holidays and on portable devices, couldn't edit properly my posts.

https://www.youtube.com/watch?v=w_ne198KDzU
It is also showing on the front page of futures.io (formerly BMT) website these days.

Go to around minute 00:14:00 to minute 00:23:00 of the video, this is where he talks explicitly about support and resistance.

Cheers
Fadi

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  #14 (permalink)
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For anybody who hasn't read it just posting this link where there was a discussion about it:
https://futures.io/traders-hideout/35189-webinar-quantitative-discre...rimes-12.html#post487654

Consistency over time
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  #15 (permalink)
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jlwade123 View Post
Don't tell me markets do not know where these VWAP bands are. See how nicely price bounced at previous week VWAP upper 2?


VWAP and VWAP bands are a very important concept to keep in mind when following the market through the day. From what I have read, when a trader acts on behalf of a customer, the commission is all derived from where they have been able to enter and exit in relation to the VWAP.
So if buying, their goal will be to buy below VWAP - the further the better. The opposite for selling.

VWAP and bands have a habit of being respected through the day. Certainly not the only thing to watch but it does give some insight into where there may be reversals in conjunction with other levels of interest.

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  #16 (permalink)
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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.

Thanks


Are you referring to supply and demand zones or just support and resistance?

It might be a idea to look into supply and demand zones if you have not already, especially if day trading. Have only just started using this and have been getting some good results.

Instead of using a 10 or 15 min chart to find these levels, have been running a 1min chart. When it comes into a level of consolidation, mark out the upper and lower levels and wait. I don't go for breakouts, have been watching and what will usually happen is a fake-out in one direction of the consolidation before either returning to the range again for a bit or it will turn and run after the fake-out.

What will usually happen if it sets up for a trade, is that price will come back and retest the consolidation area after the actual move has started. This can then offer a decent trade with less risk then trying to catch breakouts. The smaller time frame helps find the noise in the market that is useful.

There are a lot of good explanations about supply and demand but here is a short and sweet intro to Supply and demand that I stumbled upon watching random trade YouTube clips.
https://www.youtube.com/watch?v=cYrnoQBZFH0



For support and resistance instead of looking for arbitrary levels, a different way of approaching it is to plot out Low Volume Nodes (LVN) using Volume at Price.
The idea behind this is that these are known levels where price has not traded as much as at other levels. Either price blows through these levels or price has been hitting them and rejected immediately (give or take X ticks).
As opposed to High Volume Nodes (HVN) which are showing where price has spent the most time with consolidation or market action. HVN are showing where the market has found value.


Start tying LVN's in with order flow on a 5+ min footprint chart coming into these levels and it can give some good indications for low risk trades.

As Matt said, order flow is a great tool to see past the 1 dimension of candlestick charts. Everything else is a trailing indicator based on already old information.

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  #17 (permalink)
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nightshade View Post
U should read the random line thread basically
There is no real evidence to prove s&r exist or work
They are phycological levels. In my humble experience

They are indeed psychological levels, and that's why they do exist and work.

The chart below has a yellow line, which I had placed on the chart the day before this move. That yellow line indicates possible support at 3006. Sure enough, after the market opened and went down to that area, the market stopped and reversed. Sure, it actually went a few more ticks down. But guess what, it did reverse at what is seen as a big, round number, i.e. 3000. That's why people usually talk about support or resistance areas rather than pinpointing levels to the tick.

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Of course, 3000 has no intrinsic value per se. There is no consensus amongst people in the market as to why the collective shares underpinning this specific index should magically converge on a round number like that and turn around (at least temporarily).

So I think you are right, the reason is psychological. But that's precisely why, while I would never guarantee that price always reverses at a round number, I would bet you that there will be almost always some kind of reaction going on around those psychological levels that the market has come to define as support and resistance.

Edit: just adding a bit more substance, I think most would agree that the reason Technical Analysis is popular is that it is a self-fulfilling prophecy. Because it has been popularised that means that many people will look for certain patterns, such as price crossing the 200-day moving average, or the 50% fibonacci retracement... and because many people will bet on price doing something when those patterns are matched, it kind of self-reinforces the concept.... it's all in the mind.

Edit 2: I also want to add, I do not believe that all support/resistance levels are necessarily psychological... there may very well be reasons beyond Technical Analysis that I do not yet know or understand why price finds support or resistance where it does. I'm thinking simply somebody defending a level or other reasons.


Last edited by xplorer; February 6th, 2016 at 06:09 PM. Reason: clarification
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  #18 (permalink)
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From what i've found so far, looking at charts for S/R is really hit and miss. Personally ive found that the Volume Profile gives real reliable levels to make plays from. and if a price doesn't hold, you know it was an actual failure to hold and not some mistake of misreading where support might have been.

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  #19 (permalink)
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Serif View Post
Take a look at Trading Price Action On Futures | Trading Price Action On Futures and look at his YouTube videos. All he uses is support and resistance to identify areas to trade from.

Good luck.

I don't think anyone is saying price action and S&R levels can't be used. The main problem as the original poster stated is that the S&R levels are very subjective. What one trader plots out as S&R might be completely different then another depending on a lot of different factors.

Price action, candle stick patters and S&R have been around for ages but with futures we are also given more market information that can show what is happening behind this first layer and it shows what is moving the market and where these levels actually are in real time. Order flow can highlight at what price level large trades have been initiated to stop the market moving higher and reverse it or it can show trades building to push through potential areas of S&R.

Order flow and volume is just another level of market information that we have in futures, in the case of order flow, its real time indication of what and who is moving the market. Its the reason I switched from FOREX to futures so that it wasn't blind trading anymore, relying only on trailing indicators of what was really moving the market. IMHO price action and even candle sticks are still trailing indicators that then require that we work using historic chances of success that it will also follow the same action that happened in the past.

Order flow can show you what is actually happening in each and every candle as it forms and volume profile/analysis shows exactly at what price levels and to what degree each price level is historically significant, where value has been found by the market and how price moves in relation to the known value.

Don't get me wrong, I still use price action, candle sticks types and candle stick patterns for further confirmation but this is usually after the trade has been initiated.
Personally, it just made sense to seek out the most up to date information to base trades on and for me I found that in order flow/volume profile.

Each to their own but, that's the path we all must find ourselves as traders.

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