Is Support and Resistance Meaningless? - Currency Futures | futures io social day trading
futures io futures trading


Is Support and Resistance Meaningless?
Updated: Views / Replies:8,147 / 56
Created: by wallo101 Attachments:3

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 3  
 
Thread Tools Search this Thread
 

Is Support and Resistance Meaningless?

  #21 (permalink)
Elite Member
Sydney, Australia
 
Futures Experience: Intermediate
Platform: Sierra Chart, IRESS
Broker/Data: IB, IQFeed
Favorite Futures: ES, SPI, ASX stocks, options
 
Posts: 399 since Jun 2015
Thanks: 169 given, 446 received


wallo101 View Post
I'm waiting for the Market Wizards Book, i'm also going to be getting a beginners book on investing and economics (there isn't one book on amazon that doesn't have at least one one star rating).

I wonder; are there any traders that are successful like the ones interviewed that use candlestick formations and patterns, price action? Order flow sounds decent, but you need a bigger account size i believe to start with that.

Order flow has nothing to with your account size, I'm not sure where you got that idea from. In fact, order flow can help you start with a smaller account size since you can use smaller stops if you can read the momentum and be on the right side.

You are going about this the wrong way. Patterns & S/R are used to find low risk high reward trade locations and order flow is used to confirm.

If your pattern is statistically a 55% winning pattern, you can use order flow to see if the big money is long or short and increase the win rate.

Or if your S/R zone is a 50/50 area (which it pretty much always is), you can use order flow to see if big money is planning to respect it or break it.

Patterns, S/R's = locations. Order flow = confirmation
Patterns, S/R without confirmation = crap shoot
Order flow without location = crap shoot

Reply With Quote
The following 2 users say Thank You to PeakGrowth for this post:
 
  #22 (permalink)
Trading Apprentice
Kalamazoo, MI
 
Futures Experience: Beginner
Platform: NinjaTrader
Favorite Futures: Don't have one
 
Posts: 17 since Jul 2015
Thanks: 63 given, 5 received

So i could have the tape up to see if order sizes over 100 confirm that level or pattern?


PeakGrowth View Post
Order flow has nothing to with your account size, I'm not sure where you got that idea from. In fact, order flow can help you start with a smaller account size since you can use smaller stops if you can read the momentum and be on the right side.

You are going about this the wrong way. Patterns & S/R are used to find low risk high reward trade locations and order flow is used to confirm.

If your pattern is statistically a 55% winning pattern, you can use order flow to see if the big money is long or short and increase the win rate.

Or if your S/R zone is a 50/50 area (which it pretty much always is), you can use order flow to see if big money is planning to respect it or break it.

Patterns, S/R's = locations. Order flow = confirmation
Patterns, S/R without confirmation = crap shoot
Order flow without location = crap shoot


Reply With Quote
 
  #23 (permalink)
Elite Member
Sydney, Australia
 
Futures Experience: Intermediate
Platform: Sierra Chart, IRESS
Broker/Data: IB, IQFeed
Favorite Futures: ES, SPI, ASX stocks, options
 
Posts: 399 since Jun 2015
Thanks: 169 given, 446 received



wallo101 View Post
So i could have the tape up to see if order sizes over 100 confirm that level or pattern?

Sort of, there is a bit more to that.

For example, let's say you are looking at a support zone at lets say at 2000 on the ES.

Without order flow, you would try to find a pattern or something or just go buy it blindly. If you use order flow there are a few things you can pick up to your advantage before taking the plunge

- Is there absorption? If there are sellers hitting the bid, but someone is soaking it up with a limit/iceberg order, there is a big chance an insto is looking to support the market and go long there. Soak equals 5-10x the amount of the usual DOM, so for example if the DOM usually shows 1k at the bid but someones soaked up 15k contracts, someone with a big wad is long a lot of contracts. You want to be on their side.
- Which side is the momentum? Are the market orders hitting the bid large? If there are 500 lot orders hitting into the bid, then you have to be real careful that the wad soaking those contracts has a big enough wallet to hold that position. If it holds, then there is a big chance it will reverse

Google jigsaw trading free order flow, and watch the webinars.

You can definitely trade S/R on its own at good R:R locations (read, good locations - not use any S/R), but including order flow will make it better.

Reply With Quote
The following 2 users say Thank You to PeakGrowth for this post:
 
  #24 (permalink)
Elite Member
Luxembourg, Luxembourg
 
Futures Experience: Advanced
Platform: TWS
Broker/Data: Interactive Brokers
Favorite Futures: Stocks
 
Posts: 491 since May 2012
Thanks: 1,641 given, 1,126 received


wallo101 View Post
I'm waiting for the Market Wizards Book, i'm also going to be getting a beginners book on investing and economics (there isn't one book on amazon that doesn't have at least one one star rating).

I wonder; are there any traders that are successful like the ones interviewed that use candlestick formations and patterns, price action? Order flow sounds decent, but you need a bigger account size i believe to start with that.

Market Wizards is an excellent book, but there is one trap - you will get out of it exactly what you want to get out of it. This means that if you believe that support and resistance may be meaningless, I can bet there is one or more of the interviewees who will agree with your view. I tend to find different insights every time I reread this, depending on how my trading is going.

I am not sure an economics book is of much use - most of the time the models rely on the assumption that investors are rational. Most of the Market Wizards will disagree with this.

The bulk of the traders interviewed in Market Wizards don't use order flow. Right now you are looking at all of the micro-details and I am not sure you are seeing the bigger picture - no method is perfect and I am not sure any single method gives a quantifiable edge. What seems to separate the best from the rest is their ability to maximize their winners in comparison to their losers. Their are several ways to do that, each with their own pros and cons.

Reply With Quote
The following 3 users say Thank You to grausch for this post:
 
  #25 (permalink)
Market Wizard
Germany
 
Futures Experience: Intermediate
Platform: Other
Favorite Futures: ES, YM, 6E
 
Posts: 2,644 since Feb 2013
Thanks: 4,907 given, 6,441 received
Forum Reputation: Legendary


wallo101 View Post
I'm waiting for the Market Wizards Book, i'm also going to be getting a beginners book on investing and economics (there isn't one book on amazon that doesn't have at least one one star rating).

I wonder; are there any traders that are successful like the ones interviewed that use candlestick formations and patterns, price action? Order flow sounds decent, but you need a bigger account size i believe to start with that.

Books like the Market Wizard series, "Reminiscences of a Stock Operator" or "Technical Analysis" - just to give a few examples -
all had their time and are still a nice read today. But don't expect to find up-to-date trading techniques for short-term trading there.

P.S.: Trading and investing are two very different animals - futures.io (formerly BMT) is (primarily) about trading.


Last edited by choke35; August 24th, 2015 at 06:03 AM.
Reply With Quote
The following 2 users say Thank You to choke35 for this post:
 
  #26 (permalink)
Market Wizard
Bamberg, Germany
 
Futures Experience: Beginner
Platform: Sierra Chart
Broker/Data: IB, SierraCharts data
Favorite Futures: mini FDAX, ES, GC
 
Posts: 924 since Oct 2014
Thanks: 10,757 given, 2,006 received
Forum Reputation: Legendary


DarkPoolTrading View Post
Watch this webinar if you haven't already:
https://futures.io/traders-hideout/35189-webinar-quantitative-discretionary-trader-art-science-w-adam-grimes.html

So much in markets is complete noise and randomness it's scary. We (people) love to apply meaning and patterns to things where none exist. Throw up a randomly generated price chart and every single person will find patterns and support/resistance all over the place. Are those levels legit? Of course not, they're random. But we see them none the less.


wallo101 View Post
I've been watching charts the past week and notice the market does not respect support/resistance and will break through it more often then not. There's got to be a better way to trade and i'm not finding it. Order flow seems to make the most sense right now (i'm not saying it makes sense to me yet, just more sense then trading stuff like support and resistance), but i'm currently looking at charts.


wallo101 View Post
I'm waiting for the Market Wizards Book, i'm also going to be getting a beginners book on investing and economics (there isn't one book on amazon that doesn't have at least one one star rating).

I wonder; are there any traders that are successful like the ones interviewed that use candlestick formations and patterns, price action? Order flow sounds decent, but you need a bigger account size i believe to start with that.

My 2cents. I read many books and put in countless hours doing "hard work" but I realized after burning plenty of tuition dollars (i.e. loses) that I had no edge. After watching Adam Grimes webinar on futures.io (formerly BMT), I took his online course. The key was that Adam provides some key ideas and tools so you can build your own edge, no holy-grails but "what works and what work is useful to develop an edge and prove it to yourself". Sure you can find much of the same information all over futures.io (formerly BMT) or other places but Adam's course brings it all together. The Course - The Art and Science of Trading

Reply With Quote
The following 6 users say Thank You to JohnS for this post:
 
  #27 (permalink)
Trading Apprentice
Amherst
 
Futures Experience: None
Platform: Trader
Favorite Futures: es
 
Posts: 30 since Aug 2015
Thanks: 2 given, 15 received


grausch View Post
I am not sure an economics book is of much use - most of the time the models rely on the assumption that investors are rational. .

That is muddling up economics and investing IMO. People are rational in their decision making in general but being rational involves using heuristics and these heuristics produce bad decisions under uncertainty. Investing is a such a small part of economics though.

Modern Macroeconomics: Its Origins, Development And Current State is a fantastic economics book that isn't a math book.

IMO the market wizard books are incredibly overrated. To me it produces a delusional mindset that the goal is to run your $50k account up to 8 figures and become the hedge fund god. In other words, if you start out with the market wizards, you are going to have an absolutely terrible view of risk, using way too much leverage because how else are you going to make your market wizard delusion a reality?

Support and resistance is not predictive.
That is a much different thing than being meaningless though.

Reply With Quote
The following user says Thank You to animalSpiritArb1 for this post:
 
  #28 (permalink)
Elite Member
Sydney, Australia
 
Futures Experience: Intermediate
Platform: Sierra Chart, IRESS
Broker/Data: IB, IQFeed
Favorite Futures: ES, SPI, ASX stocks, options
 
Posts: 399 since Jun 2015
Thanks: 169 given, 446 received


animalSpiritArb1 View Post
That is muddling up economics and investing IMO. People are rational in their decision making in general but being rational involves using heuristics and these heuristics produce bad decisions under uncertainty. Investing is a such a small part of economics though.

Modern Macroeconomics: Its Origins, Development And Current State is a fantastic economics book that isn't a math book.

IMO the market wizard books are incredibly overrated. To me it produces a delusional mindset that the goal is to run your $50k account up to 8 figures and become the hedge fund god. In other words, if you start out with the market wizards, you are going to have an absolutely terrible view of risk, using way too much leverage because how else are you going to make your market wizard delusion a reality?

Support and resistance is not predictive.
That is a much different thing than being meaningless though.

I don't think you've read the books. The overarching theme and repeated over and over again (repeated so many times the author apologised for it) is risk management. All the traders who did talk about sizing were all taking tiny risks, 0.5 to 1%. They all hated to lose money.

The difference is that they lived in times of a lot more inefficiencies but the principles are still the same. The takeaway from the books is definitely not how much they made but how they handled risk and psychology.

Sent from my SM-N9005 using Tapatalk

Reply With Quote
The following 2 users say Thank You to PeakGrowth for this post:
 
  #29 (permalink)
Elite Member
Luxembourg, Luxembourg
 
Futures Experience: Advanced
Platform: TWS
Broker/Data: Interactive Brokers
Favorite Futures: Stocks
 
Posts: 491 since May 2012
Thanks: 1,641 given, 1,126 received


animalSpiritArb1 View Post
That is muddling up economics and investing IMO. People are rational in their decision making in general but being rational involves using heuristics and these heuristics produce bad decisions under uncertainty. Investing is a such a small part of economics though.

Modern Macroeconomics: Its Origins, Development And Current State is a fantastic economics book that isn't a math book.

IMO the market wizard books are incredibly overrated. To me it produces a delusional mindset that the goal is to run your $50k account up to 8 figures and become the hedge fund god. In other words, if you start out with the market wizards, you are going to have an absolutely terrible view of risk, using way too much leverage because how else are you going to make your market wizard delusion a reality?

Support and resistance is not predictive.
That is a much different thing than being meaningless though.

Yes, of course you are right - allow me to rephrase my statement - I am not sure that an economics, investing or trading book is of much use.

Almost all of the standard economic or investing theory will have flaws in their reasoning. For instance, when it comes to economics, it is commonly accepted that the Hoover Dam project is what pulled the US out of the recession. Thus, government spending was seen as the perfect solution to the problem, and the current government of course chooses to use that same reasoning. However, what if the US was pulled out of the recession due to WWII - think about it - the US was suddenly producing lots of goods and selling them to countries that could not produce them due to the war and the destruction of their own factories. Since their production capacity suffered, they had no choice but to turn to the US.

We could continue this argument over dozens of posts, but neither of us can ever be conclusively proven right - therein lies one of the biggest pitfalls of economic theory. Even in post-analysis, facts can be twisted to suit one's own view. In my above example, I don't know which view is right, but I can bet you that I can convincingly find facts to back either view. The person who debates best will probably be the one whose view is accepted as correct.

Similar pitfalls can be found in investing theory, since determining a stock's fair value is dependent on forecasts into the future which at best are educated guesses. Most of the models also assume investors are rational - while Kahneman and Tsversky proved they weren't - all the bubbles we've witnessed should also attest to that. Even the more mathematically inclined subject of risk management has several flaws that are glossed over. For instance VaR seems to be universally applied, but most competent risk professionals acknowledge that it is an educated guess at best. There are several assumptions made when you model VaR and all of them need to hold.

Trading books can be pretty bad as well - I have stopped reading them since, IMO, most of them focus on the wrong things. The best books seem to provide guidance to developing your own methods and psychology rather than show you how to trade. Even then, I have read some trading books where the premise seems very solid until you actually start trading this with real money. Of course, one could always argue that it depends on the individual trader applying these principles correctly, but I just found that several authors gloss over things in order to make trading sound easier or less risky than it is, i.e. they are trying to sell books.

With the above being said, there are always nuggets to be extracted, and even Reminiscences of a Stock Operator still has value today. Same with Darvas's book, same with Market Wizards. However, most people coming into trading expect easy and quick riches and therefore they themselves will gloss over the risk sections and only focus on the returns. Therein lies the biggest trap even when you read some of the best investing or trading books out there. If however, the OP approaches all of these books with a healthy dose of scepticism, does not just accept what is written as gospel and uses the above-mentioned nuggets to refine his approach or perspective to the markets, then of course he may find value in an economics, investing or trading book.

Reply With Quote
The following 7 users say Thank You to grausch for this post:
 
  #30 (permalink)
Trading Apprentice
Amherst
 
Futures Experience: None
Platform: Trader
Favorite Futures: es
 
Posts: 30 since Aug 2015
Thanks: 2 given, 15 received


Economics != Keynesianism any more than trading equals technical analysis.

PeakGrowth , I have read everything Schwager has done, even Fundamental Analysis.

Is great to read risk 1% a trade and then people go and open a futures account with 5k and use 10:1 leverage, 1% a trade on a system with no edge.

The series is so popular because it sells people a dream.

Reply With Quote
The following user says Thank You to animalSpiritArb1 for this post:

Reply



futures io > > > > Is Support and Resistance Meaningless?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
A different look at Support and Resistance Xav1029 The Elite Circle 18 September 1st, 2012 07:07 AM
Support, Resistance - How to Find It, and How to Use It ryanmnly The Elite Circle 57 May 31st, 2012 10:41 AM
Support and Resistance SpyderTrader NinjaTrader Programming 11 May 13th, 2012 05:24 PM
Support and Resistance tony2009 Traders Hideout 13 July 8th, 2011 07:12 PM


All times are GMT -4. The time now is 01:57 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-17 in 0.20 seconds with 20 queries on phoenix via your IP 54.226.113.250