TRADING SUPPORT AND RESISTANCE DIDN'T WORK UNTIL I STARTED DOING THIS

Summary

In this video, the speaker shares valuable insights into trading support and resistance in the forex market. They emphasize that while support and resistance are key tools, they need to be combined with other factors like market structure, momentum, and liquidity to form a complete trading strategy. The video also highlights the importance of waiting for confirmation before entering trades and explains how timing during high liquidity sessions can impact the success of trades. Overall, the speaker urges traders to practice these strategies and learn from real market experiences.

Takeaways

• 😀 Support and resistance are foundational concepts, but they are not enough on their own for a successful trading strategy.
• 😀 Trading support and resistance requires an understanding of market structure, trend direction, and momentum to be effective.
• 😀 The best time to trade support and resistance is during high liquidity periods, such as the overlap of the London and New York trading sessions.
• 😀 A strong confirmation, such as a bearish engulfing candle, provides better trading opportunities than just blindly trading at support and resistance levels.
• 😀 Always wait for confirmation before entering a trade, as acting on unconfirmed levels can lead to unreliable results.
• 😀 Support and resistance levels can fail, especially during times of low market liquidity when there’s not enough volume to respect these levels.
• 😀 Market structure, including trends and price action, must be analyzed alongside support and resistance for a more accurate trade decision.
• 😀 Momentum is key to confirming price action and can help identify when a support or resistance level is likely to hold or break.
• 😀 A trader must use confluence—multiple confirming factors—such as market structure, momentum, and liquidity to increase the probability of success.
• 😀 Trading should be practiced consistently, with analysis based on live charts and real-time market conditions, to gain true trading proficiency.

Q & A

Why does the speaker believe that support and resistance alone is not enough for a successful trading strategy?

The speaker believes that support and resistance alone is incomplete because while it is a good tool for identifying key price levels, it doesn't factor in other crucial elements like market structure, momentum, and timing, which are needed to make better trading decisions and increase the probability of success.

What are the key components that should be combined with support and resistance for effective trading?

The key components that should be combined with support and resistance are market structure, momentum, and timing. These elements help traders understand the trend, confirm price action, and determine the best time to enter the market.

How does market structure influence the use of support and resistance levels?

Market structure helps determine the overall trend (whether the market is bullish or bearish). When the market is in an uptrend (making higher highs and higher lows), traders should focus on support levels, while in a downtrend (making lower lows and lower highs), resistance levels become more relevant.

What is the role of momentum in trading support and resistance?

Momentum helps confirm whether a trade is likely to succeed. Instead of entering a trade immediately when price reaches a support or resistance level, traders should wait for momentum to show the market's direction (e.g., through candlestick patterns or momentum shifts) to increase the probability of a successful trade.

Why is timing important in trading support and resistance levels?

Timing is important because support and resistance levels are more likely to hold during times of high liquidity, typically during active trading sessions like the New York or London sessions. Trading during these times increases the probability that the market will respect the support or resistance level.

What does the speaker mean by support and resistance being a 'zone' rather than a 'level'?

The speaker emphasizes that support and resistance are often not exact price levels, but rather zones where price is likely to reverse. A zone can consist of a range of prices where price may bounce, instead of a single, precise level.

What are confluences, and why are they essential in trading support and resistance?

Confluences are multiple factors or tools that align to increase the probability of a successful trade. In the context of support and resistance, confluences could include market structure, momentum, timing, and other technical indicators. Using confluences strengthens the validity of a trade setup.

How should a trader approach support and resistance during a trending market?

In a trending market, a trader should align their trades with the trend. In a bullish market, focus on support areas to buy, and in a bearish market, focus on resistance areas to sell. This ensures that trades are made in the direction of the prevailing market movement.

What does the speaker mean by 'confirmation' before entering a trade at a support or resistance level?

Confirmation refers to waiting for signs that the price will reverse at the support or resistance level, such as candlestick patterns (like engulfing candles) or a shift in momentum. This confirmation reduces the risk of entering a trade prematurely, where the price may not actually reverse.

Why does the speaker advise against rushing into trades at support or resistance levels?

The speaker advises against rushing into trades because it often leads to poor decision-making. Instead, traders should wait for proper confirmation (such as momentum shifts or candlestick patterns) before entering a trade, ensuring a higher probability of success and better risk management.