I think for a novice trader like me who doesn't yet have the knowledge to do the sort of preparation you describe it's much easier to take the safe route and look for patterns and wait for confirmation.
I've been guilty of jumping the gun a few times and hopping in at what I had determined as support/resistance levels only to have it bust through on me because I didn't wait for confirmation. Obviously those levels I had identified weren't the major zones I should be looking for.
More work and study needed on my part but in the meantime I'll have to play it safe without falling into the trap of wanting too much confirmation. Otherwise I'll end up as sharkbait as Darktone calls it. Yep guilty of doing that as well.
Mate..no worries and am not having a go at anyone, thats not how my posts were meant to come across.
I never said once that it was wrong to wait for confirmation, not once did I say that and I know you haven't said that either!
I was simply trying to express that your risk/reward massively improves if you anticipate rather than wait for confirmation, but not only that, you stand a much better chance of the trade maturing and working out as your stop loss if you use one does not need to be located below pin-bars or engulfing bars or any other type of pattern candles or whatever!
Most of the time but not all of the time price re-visits the same level you have entered, so most traders that wait for confirmation have stops below the confirmation point..ie: a pin-bar which is where the S&R level might be, so they get stopped out prematurely and have a bigger stop that what is needed. Then they start second guessing or trying to make a call if they should re-enter or not and it all becomes a bit of a mess and circus.
But even so, if you wait for price confirmation, your often waiting for price to move a % of the "trade" that's missed profit...missed opportunity...missed lower risk and can lead to second guessing as described above.
If you anticipate a move, then by the time others are scratching their head and deciding to enter 30-60pts or more later on the back of a pin or something, you are well in profit and deciding to scale out, hold or exit.
If you expect price to move say 0.5% off a support point and your entering the trade after its moved 0.2% or 0.3% then is that not telling you something ? The price can come back to that support which is 0.3% away, but your expected upside is only 0.2% away. But the trader who anticipates the level is already sitting pretty with .3% of the full move in the bank.
On to the levels...
Yes, you certainly can't just plot any old levels on the chart and then off you go and trade them all. Doesn't work like that nor do I suggest anyone does that!
It takes a bit of time and work to MAP the chart, I only trade levels/zones that have a technical factor on multiple time frames, there is a technique for doing this which would take a bit of time to explain. But there IS method to the madness as some people see it.
I do not blindly trade any old S&R level, a lot of care and attention goes into my chart mapping which leads me to confidently enter trades at those levels/zones without confirmation.
