How to trade Support and Resistence the SIMPLE WAY

Summary

In this video, Chamilia, a female day trader, breaks down the concept of support and resistance in a simple, easy-to-understand way for beginners. She walks viewers through how to identify support (the floor) and resistance (the ceiling) on charts, explaining how price tends to bounce within these levels before eventually breaking out. Using real-life examples on the 5-minute time frame, she demonstrates scalp setups and emphasizes the importance of managing risk by avoiding greed. Chamilia encourages viewers to take small, consistent profits rather than aiming for big wins, ensuring they stay grounded in the market.

Takeaways

• 😀 Support and Resistance are fundamental concepts in trading, with support acting as the market 'floor' and resistance as the 'ceiling'.
• 😀 The goal of support and resistance trading is to buy at support and sell at resistance, until a breakout occurs.
• 😀 A range is created when price repeatedly bounces between support and resistance levels, forming a predictable pattern.
• 😀 Traders should avoid being greedy and focus on small, consistent profits (e.g., a few hundred or thousand dollars at a time).
• 😀 Scalping is a short-term trading strategy that involves quick entries and exits, ideal for smaller timeframes like the 5-minute chart.
• 😀 The key to successful trading is simplicity—avoid overcomplicating things with too many technical terms or complex strategies.
• 😀 Always consider the risk-to-reward ratio, and don’t aim for big profits in one trade. Consistent, smaller wins are the key.
• 😀 Be aware of when a market range is no longer valid. If price breaks out of the range, be prepared to adapt your strategy.
• 😀 Traders should not hold onto positions too long, especially when price has already touched the target zone a few times without breaking it.
• 😀 Using candlestick patterns and observing price action can provide clear signals for entry and exit points within the support and resistance framework.

Q & A

What is the main focus of this video?

The video primarily focuses on explaining the concept of support and resistance in trading, with a simple and beginner-friendly approach.

What is the role of support and resistance in trading?

Support and resistance represent key levels where the price tends to reverse or stall. Support is the price level where the market is unlikely to fall below, while resistance is the level the market struggles to rise above.

Why does Chamilia emphasize simplicity in her explanations?

Chamilia stresses simplicity to make trading accessible for everyone, including beginners. She wants her viewers to grasp basic concepts without feeling overwhelmed by complex terms.

What is the difference between support and resistance in trading?

Support is the 'floor' where price tends to bounce upward, while resistance is the 'ceiling' where price tends to reverse downward. These levels help traders identify potential entry and exit points.

How does Chamilia approach trading in terms of risk and reward?

Chamilia emphasizes not being greedy and focusing on small, consistent profits. She aims for modest gains, such as a couple of hundred to a thousand dollars, rather than attempting to make large profits with high risk.

What time frame does Chamilia focus on for her trading?

Chamilia primarily uses the 5-minute time frame for her scalping strategy, which is ideal for making quick trades with small time frames.

How does Chamilia trade support and resistance levels?

She looks for price action at key support and resistance levels. When price touches resistance, she sells, and when it touches support, she buys. This strategy works well in a ranging market.

Why is Chamilia using the bar replay feature in her charting?

The bar replay feature allows Chamilia to demonstrate how support and resistance levels work in real-time on the chart, showing her viewers how she analyzes and executes trades.

What is the significance of the 1:1 risk-to-reward ratio mentioned in the video?

The 1:1 risk-to-reward ratio means that Chamilia sets her stop loss and take profit levels at equal distances from her entry point. This ensures that for every unit of risk, she aims for an equal unit of reward.

What is the ultimate goal for Chamilia's trading approach?

The goal is to consistently take small trades with manageable risks, ensuring steady growth rather than aiming for large, risky trades that could wipe out an account.