SR, Price Action, Pivot points

[asarda007]

Hi there,

Markets I am interested in: Indices (DOW & FTSE mainly).
My background: newbie to trading

After going through a lot of threads on this forum I am curious about the lack of usage of indicators (MACD, Stochs etc.) by people submitting posts.

I am trying to find out how we can use price action to trade (generate entry/exit points). How do we work out support and resistance (S/R) levels. The S/R levels must be different for different time frames. How do we know which one to use? How can we use S/R with price actions, and what about the volume stuff we need to know.

My assumption is that if we are simply looking at price action we need to look at graph formation (double tops, H&S etc.). Overall summarising:

1. How can we use price/volume action.
2. How do we calculate support and resistance (in different time frames).
3. Which time frames do pro traders look at - I suppose that must also have an impact on the movements.
4. Does pivot points come into play when using price actions?

I would appreciate any advise or tried and tested strategy. I am trying to formulate something (most proably out there already in use) from which I can get a steady start in spread betting.

Thanks in advance.

A.

 

[JonnyT]

Personally I think

1) S&R should be binned.
2) Pivot points should be binned.
3) Volume serves no purpose.
4) Indicators should be binned.

If it's going up go long, if its going down go short. You have to decide on timescales etc.

Work out some risk and money management around this basic tennat and hey presto you can trade profitably

JonnyT

 

[BBB]

If it's going up go long, if its going down go short.

:cheesy:


Probably one of the best posts I've seen in a long time.

It aint rocket science is it!

Why do so many people convince themselves/others it is?

 

[Dave1971]

I agree, trading the trend and breaks from the trend are the most reliable methods. I think too many people look for the 'magic system' which they believe exists because of all the hype put out by software developers.

The trick which I haven't yet got to grips with is choosing the right time frame for the chosen market, then staying true to it. i.e. Don't choose a trade on a daily chart, but start looking at the weekly trend when it starts losing, I have done this to many times, and it always ends in tears.

Dave

 

[oatman]

Support and resistance do not need to be calculated. They are there to be seen on the chart.

 

[asarda007]

Thanks for all the feedback... what time frames would you recommend (weekly, monthly). The only problem I have had when using the technique (when going up, when going down sell) is that the market goes in the opposite direction as soon as I enter the trade.

For example I bought FTSE Sept future when it went up couple fo days ago, now its come back down (and to further annoy me its not going anywhere!!).

Anyway thanks for your help.

A.

 

[asarda007]

Support and resistance do not need to be calculated. They are there to be seen on the chart.

Thanks once again, so I suppose S/R are different for different time frames (hourly, daily, weekly and monthly). Since most of the time the graph is like a sine wave - the simple question I need to ask is which are the real important ones - I mean that traders think YES its approaching a level where we may see some action!

Regards.

 

[oatman]

That's down to your interpretation and your risk profile.

 

[SOCRATES]

Yes the dilemma is that the chosen market is not now behaving as it ought to, mucking up tthe timeframe.There must exist a different solution in order to avoid the goal posts being moved
most inconveniently at critical junctures.Why not abandon timeframes altogether and replace them with another alternative ? Or what about following the price and what it does and ignoring tthe timeframe?

 

[dc2000]

Forget S&R it gives too many levels and your still non the wiser forget volume forget TA indicators etc they work best in hindsight. Magic system "Ive not found one yet"

Profitable systems, they exist, usually through good entry and exit rules and good money management do you have to pay $1,000s nope

 

[SOCRATES]

That's right. Why overcomplicate it all when it is that simple?
And in any event all you have to choose is one of three outcomes,
up or down or sideways. simple really..

 

[Trader333]

I have to disagree with some of the views here. I have found volume patterns to be one of the most reliable when trading stocks.



Paul

 

[esiotrot]

My thoughts for what they are worth:

Price is everything.

However it's price action that creates S/R levels, so they are there for all to see on the chart and they work. Too many? Sure but step away and look from a distance and the important ones become clearer. It's a bit like chart patterns; if you cannot see them from 6 feet away they don't exist.

Volume - a confirmation of what's happening but as I trade EOD I cannot see them as a forward indicator. Could be wrong though.

Pivots? Personally I don't use them but for some reason they appear to work (sometimes and for some people?)

Indicators? Depends on your trading system. If you trade reversals then by all means use them. IMO some work some of the time and life's too short to spend much time findout which one's working today.

If you trade breakouts then use S/R and chart patterns. Momentum traders look for new highs and new lows.