profitable support and resistance trading on stocks

This is a discussion on profitable support and resistance trading on stocks within the Stocks forums, part of the Markets category; I only trade support and resistance on indices .I have been monitoring it on stocks , it works well , ...

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Old Jul 21, 2017, 8:56am   #1
Joined Apr 2017
profitable support and resistance trading on stocks

I only trade support and resistance on indices .I have been monitoring it on stocks , it works well , I have tested it with several advance calls on stocks .

Let us see if anyone can benefit and add value to this thread.I won't be posting much on this thread , so it is for community to discuss.Welcome to trading Supports on stocks.Everything is intended for educational purposes.

This support and resistance method works well on higher time frames like 4 hours and daily .

It works see these threads

http://www.trade2win.com/boards/futu...et-forget.html

http://www.trade2win.com/boards/tech...trade-vod.html

http://www.trade2win.com/boards/tech...ml#post2933660

Defining a trend
Point is that every trader should choose 1 time frame (maximum 2), for their trend definition. This trend definition must always be 2-3, time frames higher than the one of entry. Example: entering on 15 or 30 min charts, use 4 hour for trend definition.
• In a down trend the buy is 10 pips above the high of last two peaks.
• In a uptrend the buy is 10 pips above the high of last peaks with full candle close.
• In an uptrend sell is 10 pips below the low of last two troughs.
• In an down trend sell is 10 pips below the low of last troughs , with full candle close.
• Break of 2 sets of major supports or resistances (with a minimum 50 pip distance between the two ) constitutes a trend.
• Sloping trend and channels must be evident on 4 hour charts (not only on 15 min or 30 min)
• Corrections to the trend /channel lines are not down trends in an up trend , and vice versa.
120 lwma on 30 min is a good trend indicator and dynamic support or resistance indicator
• For long positions price should be above 120 lwma on 30 min chart.
• For short positions price should be below 120 lwma on 30 min chart.

3.8 Resistances Compulsory filter
• For long positions price has to sit (close) above resistance with full 30 min candle or at least with more than half of 30 min. candle real body closed above resistance.
• Have you seen resistance become support on several points?
• Don’t open long position if major resistance level price is less than 20 pips away from current price.
• Is there newly formed resistance or down channel/slope on tick charts? Close long open position if formed!
Up and down channels - Compulsory filter
• Is there an up channel for longs or down channel for shorts on 48 hour, plus time frame on hourly charts?

• Do not buy against newly formed resistance. Close open position if formed!
• Do not buy below resistances ,tops of channels or below moving averages

Supports Compulsory filter
• For short positions price has to sit (close) below support with full 30 min candle or at least with more than half of 30 min. candle real body closed below support.
• Have you seen support become resistance on several points?
• Don’t open short position if major support level price is less than 20 pips away from current price.
• Is there newly formed support or up channel/slope on tick charts? Close open short position if formed!
• Do not sell against newly formed support. Close open position if formed!
Do not sell above support, bottoms of channels or above moving averages


• Always watch s and p supports , resistances , trend lines and channels to trade .
• The system set ups must valid on the instrument as high probability example n apple it has to be valid on apple (not s and p , dow , nasdaq)

Up and down trend lines/slope in last 24 hours on 1 hour chart - Compulsory filter
• An uptrend lines in last 24 hours on 1 hour charts has to be in place for longs.
• An up slope in last 24 hours on 1 hour charts has to be in place for longs.
• A down trend lines in last 24 hours on 1 hour charts has to be in place for shorts.
• A down slope in last 24 hours on 1 hour charts has to be in place for shorts.
• We are not looking at 3 to 5 bars or a few bars, but looking at overall trend direction and continuation.
• This filter applies to high probability price action or trend retracement intraday.


Ranging market - Compulsory filter (Keep out of ranging markets)
• Is market in a range? Is there a valid very high probability trade in this range?
• Draw ranging market boxes and trend/channel lines on 30 min/1 hour/4 hour charts over last few days.
• Draw ranging boxes and trend/channel lines on 4 hour charts over last sixty days.
• 2 * daily range or 200 pips , whichever is lower , adds to trend definition (if the close is not above major support for shorts or below major resistance for longs ) on 4 hour charts
• Trend breakout of a major 4 hour ranging market , price has to clear the lowest supports by 50 pips or clear the highest resistance by 50 pips .
• Trend must make a new high above 2 * daily range or 200 pips , whichever is lower , and high must be above highest resistances or low below major support zones . within 10 days
• If support = resistance (within 10 pips on 4 hour charts within last 60 days ) , there are two touches at resistance and two touches at supports ,draw a rectangular ranging box on 30 min charts
• Fundamental stock yields expectations announcements can invalidate ranging market filters , and make trades high probability in a ranging market .
• Previous high in an uptrend is not a resistance. Unless it was a support and become a resistance. Previous low in a down trend Is not support, unless it was a resistance which has now become support.

Brick wall zone .Where prices have touched a support area of approximately 50 pips and bounced off it , draw a brick wall zone on your charts , in purple on 30 min charts.

Stochastic on 30 minutes charts - Compulsory filter
• Stochastics has to be turned on up towards 60 (ideally above) on 30 min chart for longs.
• Stochastics has to be turned on down towards 40 (ideally below) on 30 min chart for shorts.
• Stochastic setup on 30 min chart is: 28, 6 ,10.

3.16 When markets are trending and making higher highs or lower lows in strong trends on various time frames, entries are more important. We do not know the potential targets.
• We ignore targets for trending systems and multi systems. We ignore supports for short trades and resistances for long trades.
• In ranging and weak trends, make sure the trades are not selling at support areas or buying at resistance areas. There has to be at least 15 pips to next support/resistance.
• In ranging and weak trends, make sure the trades are not selling at bottom of channel areas or buying at the top of channel areas. There has to be at least 15 pips to next channel lines.


Trade setup failure
• At what point will the trade set up fail?
• A set up becomes invalid, if for more than 120 minutes it remains within 10 pips.
• If price has gone above resistance with full bar, but closes below resistance, the setup has failed. Opposite for supports

Pre-entry analysis procedure

Before putting any new order it is necessary to check many things in order to make quality analysis and find high probability entry points. Following procedure, in combination with above rules, will also help one to avoid picking wrong trades.


• Long positions: In major extreme down trends on daily charts all compulsory filters are valid.
• Short positions: In major extreme up trends on daily charts all compulsory filters are valid.

4.2 Range boxes
• First thing in the morning, before trading, draw overnight range boxes. See rule 1.3 for more details.
• It is also necessary to draw bigger multi day range boxes, if price is not trending.
• This will help one to avoid ranging markets and bad entries.

4.3 Supports and resistances
• Draw supports and resistances, both horizontal and diagonal (trend lines).
• Major supports and resistances has to be drawn and bolded.

4.4 Channels
• Draw channels if price is in trending mode.
• Avoid putting long orders near the top of channel and short near bottom of channel

4.9 Is price sitting above diagonal support for longs or below diagonal resistance for shorts?

• Have you missed any trend lines?
• Have you missed any major support resistance lines?
• Have you missed any range boxes?
• Have you missed any channels?
• Have you missed any other information from the charts

Is it a clear clean entry?
• A clean clear entry is a non-choppy entry; it can be in a ranging market.
• Clean clear entry is where there are more bars in same direction, rather than one or two bars up or one or two bars down i.e. 50/50 undecided .look at 1 hr , 4 hr and daily candles and count pips down and pips up .

trader mindset problems

Are you hesitant to put on a trade due to this fear in your head about previous historical resistances?
• In trending markets current momentum and trend mas has priority over historical areas.

Your mind is full of misinformation about useless historical indicators? So you are good at using indicators and have useless knowledge about using indicators?
• We don't use indicators in the way they were designed and do not use them for overbought/oversold.

Which wins in trending markets? Historical market support for short trades? Historical resistance for long trades? Or current market trend and momentum? For amateurs, historical.

Do we compare which trade to put on, if we have a choice of several currencies?
• We take the first valid signal, the first one to fit system criteria. We can take up to two trades per currency.
• Later we can put on a second pair, as soon as it fits criteria for entry.
• If it fits system filters put it on without hesitation and delaying, at close of current bar on 15 min or 30 min.

I am waiting for a better entry although I have a system fit entry. Amateur you miss trades waiting for better entries.
• Are you a clueless amateur that wants to second guess a system, when entry is valid and ready to be executed?
• Do not delay, enter late and miss trades because of amateur head.

I have other amateur issues, highlighted in staff problems.
• If yes, is the trade valid due to staff problems and head issues of staff? (see staff problems worksheets)

Have you drawn trend lines and channels correctly, or is this just another half assed job?
• Are trendlines drawn from wick to wick, as per our requirements?
• A ****ed up trend line image is shown in images , with a half assed trend line image (see worksheet biased missing trades)

Have you done a thorough job? You regularly miss many of the following, and incur losses of my money.
• If no, stop wasting mine and everybody else's time.
• Are you impatient?
• Are you jumping into this trade?
• Are you waiting for your need to be right and delaying entry?
• Is this a revenge trade?
• Are you exiting on emotions?
• Are you exiting, not according to the system, but according to your emotional state?
• Are you thinking rationally, after a loss?
• Have you exited to satisfy your mood?
• Do you not have the patience to wait for a high probability trade?
• Are you going to remain a 50/50 trader all your life?
• Can you not think like a high probability trader?
• Can you not pass on this trade?
• Are you putting on this trade impatiently, so you do not miss trades?
• Do you not have the discipline to stick to system rules?



Head problems . Get the out of here.
• Sometimes there is a problem in the head. Are you seeing Madonna or gorillas on mars? Are you seeing trends/setups which do not exist as high probability?
• Do you have any biases, like in the picture on biases worksheets that prevent you from putting on a system trade?
• Your crazy head has problems calling trades, second guessing system trades, missing trades, delayed entries as in the picture below or any other mindset issues .

get a stock screener
http://traderhq.com/10-best-stock-screeners/


read psychology threads

http://www.trade2win.com/boards/psyc...ent-forum.html

read my indices thread

http://www.trade2win.com/boards/trad...ks-profit.html

http://www.trade2win.com/boards/indi...asdaq-s-p.html

http://www.trade2win.com/boards/indi...ml#post2920022

http://www.trade2win.com/boards/trad...d-trading.html





foroom lluzers is offline   Reply With Quote
Thanks! The following members like this post: iq200
Old Nov 13, 2017, 8:23am   #3
Joined Oct 2017
Quote:
Originally Posted by foroom lluzers View Post
I only trade support and resistance on indices .I have been monitoring it on stocks , it works well , I have tested it with several advance calls on stocks .

Let us see if anyone can benefit and add value to this thread.I won't be posting much on this thread , so it is for community to discuss.Welcome to trading Supports on stocks.Everything is intended for educational purposes.

This support and resistance method works well on higher time frames like 4 hours and daily .

It works see these threads

http://www.trade2win.com/boards/futu...et-forget.html

http://www.trade2win.com/boards/tech...trade-vod.html

http://www.trade2win.com/boards/tech...ml#post2933660

Defining a trend
Point is that every trader should choose 1 time frame (maximum 2), for their trend definition. This trend definition must always be 2-3, time frames higher than the one of entry. Example: entering on 15 or 30 min charts, use 4 hour for trend definition.
• In a down trend the buy is 10 pips above the high of last two peaks.
• In a uptrend the buy is 10 pips above the high of last peaks with full candle close.
• In an uptrend sell is 10 pips below the low of last two troughs.
• In an down trend sell is 10 pips below the low of last troughs , with full candle close.
• Break of 2 sets of major supports or resistances (with a minimum 50 pip distance between the two ) constitutes a trend.
• Sloping trend and channels must be evident on 4 hour charts (not only on 15 min or 30 min)
• Corrections to the trend /channel lines are not down trends in an up trend , and vice versa.
120 lwma on 30 min is a good trend indicator and dynamic support or resistance indicator
• For long positions price should be above 120 lwma on 30 min chart.
• For short positions price should be below 120 lwma on 30 min chart.

3.8 Resistances Compulsory filter
• For long positions price has to sit (close) above resistance with full 30 min candle or at least with more than half of 30 min. candle real body closed above resistance.
• Have you seen resistance become support on several points?
• Don’t open long position if major resistance level price is less than 20 pips away from current price.
• Is there newly formed resistance or down channel/slope on tick charts? Close long open position if formed!
Up and down channels - Compulsory filter
• Is there an up channel for longs or down channel for shorts on 48 hour, plus time frame on hourly charts?

• Do not buy against newly formed resistance. Close open position if formed!
• Do not buy below resistances ,tops of channels or below moving averages

Supports Compulsory filter
• For short positions price has to sit (close) below support with full 30 min candle or at least with more than half of 30 min. candle real body closed below support.
• Have you seen support become resistance on several points?
• Don’t open short position if major support level price is less than 20 pips away from current price.
• Is there newly formed support or up channel/slope on tick charts? Close open short position if formed!
• Do not sell against newly formed support. Close open position if formed!
Do not sell above support, bottoms of channels or above moving averages


• Always watch s and p supports , resistances , trend lines and channels to trade .
• The system set ups must valid on the instrument as high probability example n apple it has to be valid on apple (not s and p , dow , nasdaq)

Up and down trend lines/slope in last 24 hours on 1 hour chart - Compulsory filter
• An uptrend lines in last 24 hours on 1 hour charts has to be in place for longs.
• An up slope in last 24 hours on 1 hour charts has to be in place for longs.
• A down trend lines in last 24 hours on 1 hour charts has to be in place for shorts.
• A down slope in last 24 hours on 1 hour charts has to be in place for shorts.
• We are not looking at 3 to 5 bars or a few bars, but looking at overall trend direction and continuation.
• This filter applies to high probability price action or trend retracement intraday.


Ranging market - Compulsory filter (Keep out of ranging markets)
• Is market in a range? Is there a valid very high probability trade in this range?
• Draw ranging market boxes and trend/channel lines on 30 min/1 hour/4 hour charts over last few days.
• Draw ranging boxes and trend/channel lines on 4 hour charts over last sixty days.
• 2 * daily range or 200 pips , whichever is lower , adds to trend definition (if the close is not above major support for shorts or below major resistance for longs ) on 4 hour charts
• Trend breakout of a major 4 hour ranging market , price has to clear the lowest supports by 50 pips or clear the highest resistance by 50 pips .
• Trend must make a new high above 2 * daily range or 200 pips , whichever is lower , and high must be above highest resistances or low below major support zones . within 10 days
• If support = resistance (within 10 pips on 4 hour charts within last 60 days ) , there are two touches at resistance and two touches at supports ,draw a rectangular ranging box on 30 min charts
• Fundamental stock yields expectations announcements can invalidate ranging market filters , and make trades high probability in a ranging market .
• Previous high in an uptrend is not a resistance. Unless it was a support and become a resistance. Previous low in a down trend Is not support, unless it was a resistance which has now become support.

Brick wall zone .Where prices have touched a support area of approximately 50 pips and bounced off it , draw a brick wall zone on your charts , in purple on 30 min charts.

Stochastic on 30 minutes charts - Compulsory filter
• Stochastics has to be turned on up towards 60 (ideally above) on 30 min chart for longs.
• Stochastics has to be turned on down towards 40 (ideally below) on 30 min chart for shorts.
• Stochastic setup on 30 min chart is: 28, 6 ,10.

3.16 When markets are trending and making higher highs or lower lows in strong trends on various time frames, entries are more important. We do not know the potential targets.
• We ignore targets for trending systems and multi systems. We ignore supports for short trades and resistances for long trades.
• In ranging and weak trends, make sure the trades are not selling at support areas or buying at resistance areas. There has to be at least 15 pips to next support/resistance.
• In ranging and weak trends, make sure the trades are not selling at bottom of channel areas or buying at the top of channel areas. There has to be at least 15 pips to next channel lines.


Trade setup failure
• At what point will the trade set up fail?
• A set up becomes invalid, if for more than 120 minutes it remains within 10 pips.
• If price has gone above resistance with full bar, but closes below resistance, the setup has failed. Opposite for supports

Pre-entry analysis procedure

Before putting any new order it is necessary to check many things in order to make quality analysis and find high probability entry points. Following procedure, in combination with above rules, will also help one to avoid picking wrong trades.


• Long positions: In major extreme down trends on daily charts all compulsory filters are valid.
• Short positions: In major extreme up trends on daily charts all compulsory filters are valid.

4.2 Range boxes
• First thing in the morning, before trading, draw overnight range boxes. See rule 1.3 for more details.
• It is also necessary to draw bigger multi day range boxes, if price is not trending.
• This will help one to avoid ranging markets and bad entries.

4.3 Supports and resistances
• Draw supports and resistances, both horizontal and diagonal (trend lines).
• Major supports and resistances has to be drawn and bolded.

4.4 Channels
• Draw channels if price is in trending mode.
• Avoid putting long orders near the top of channel and short near bottom of channel

4.9 Is price sitting above diagonal support for longs or below diagonal resistance for shorts?

• Have you missed any trend lines?
• Have you missed any major support resistance lines?
• Have you missed any range boxes?
• Have you missed any channels?
• Have you missed any other information from the charts

Is it a clear clean entry?
• A clean clear entry is a non-choppy entry; it can be in a ranging market.
• Clean clear entry is where there are more bars in same direction, rather than one or two bars up or one or two bars down i.e. 50/50 undecided .look at 1 hr , 4 hr and daily candles and count pips down and pips up .

trader mindset problems

Are you hesitant to put on a trade due to this fear in your head about previous historical resistances?
• In trending markets current momentum and trend mas has priority over historical areas.

Your mind is full of misinformation about useless historical indicators? So you are good at using indicators and have useless knowledge about using indicators?
• We don't use indicators in the way they were designed and do not use them for overbought/oversold.

Which wins in trending markets? Historical market support for short trades? Historical resistance for long trades? Or current market trend and momentum? For amateurs, historical.

Do we compare which trade to put on, if we have a choice of several currencies?
• We take the first valid signal, the first one to fit system criteria. We can take up to two trades per currency.
• Later we can put on a second pair, as soon as it fits criteria for entry.
• If it fits system filters put it on without hesitation and delaying, at close of current bar on 15 min or 30 min.

I am waiting for a better entry although I have a system fit entry. Amateur you miss trades waiting for better entries.
• Are you a clueless amateur that wants to second guess a system, when entry is valid and ready to be executed?
• Do not delay, enter late and miss trades because of amateur head.

I have other amateur issues, highlighted in staff problems.
• If yes, is the trade valid due to staff problems and head issues of staff? (see staff problems worksheets)

Have you drawn trend lines and channels correctly, or is this just another half assed job?
• Are trendlines drawn from wick to wick, as per our requirements?
• A ****ed up trend line image is shown in images , with a half assed trend line image (see worksheet biased missing trades)

Have you done a thorough job? You regularly miss many of the following, and incur losses of my money.
• If no, stop wasting mine and everybody else's time.
• Are you impatient?
• Are you jumping into this trade?
• Are you waiting for your need to be right and delaying entry?
• Is this a revenge trade?
• Are you exiting on emotions?
• Are you exiting, not according to the system, but according to your emotional state?
• Are you thinking rationally, after a loss?
• Have you exited to satisfy your mood?
• Do you not have the patience to wait for a high probability trade?
• Are you going to remain a 50/50 trader all your life?
• Can you not think like a high probability trader?
• Can you not pass on this trade?
• Are you putting on this trade impatiently, so you do not miss trades?
• Do you not have the discipline to stick to system rules?



Head problems . Get the out of here.
• Sometimes there is a problem in the head. Are you seeing Madonna or gorillas on mars? Are you seeing trends/setups which do not exist as high probability?
• Do you have any biases, like in the picture on biases worksheets that prevent you from putting on a system trade?
• Your crazy head has problems calling trades, second guessing system trades, missing trades, delayed entries as in the picture below or any other mindset issues .

get a stock screener
http://traderhq.com/10-best-stock-screeners/


read psychology threads

http://www.trade2win.com/boards/psyc...ent-forum.html

read my indices thread

http://www.trade2win.com/boards/trad...ks-profit.html

http://www.trade2win.com/boards/indi...asdaq-s-p.html

http://www.trade2win.com/boards/indi...ml#post2920022

http://www.trade2win.com/boards/trad...d-trading.html






Thanks for sharing great info foroom lluzers.
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