Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
It's sort of like the present situation in corn. The charts made a consolidation breakout about two weeks ago. But there are probably some fundamental situations going on in the corn fields pointing towards a large harvest this fall. Because as you can see the breakout turned into A fake out. And has continued down through the prior consolidation range.
Can you help answer these questions from other members on NexusFi?
It's kind of like the more I start to know about something pertaining to markets. The more I realize I know nothing at all. What came first the chicken or the egg?
This is the primary reason I turn off my PnL when in a trade. I try to focus on making my trading decisions based on what the market is telling me. Not what my PnL is reading.
For the instruments I trade I personally believe in and use pivots. I feel pivots are more of a value when the algos are "mostly" in control. Meaning MM's can only do so much to control a volatile and heavy volume market. But when they are able to gain control symbols like CL do show controlled movements that can sometimes be forecasted using certain pivots. Price will gravitate to these levels like a magnet, sometimes consolidate and continue , sometime reverse depending on how much volume comes in.
I've started to look at levels including support and resistance a little differently. I used to say "ok here's a level, and this is an area that I predict buyers may start stepping in". So I'd wait for us to reach that level, and judge how the market reacts to it. Based on this I would make a determination as to whether or not it would break out or reverse.
However, I found that when I did this I was right maybe 35% of the time. If I got good swings off them I did pretty good because I was risking 2 and making 8-16. However, if you don't get those big swings, or your percentage decreases then the drawdowns become too big.
So I tried doing the opposite. I don't try to predict which prices will hold. Instead I have edges which predict which prices will touch. For instance, we've opened outside of the previous day's range. What is the probability that we will trade back to the previous day's point of control?
So now I don't look at things as "support and resistance" but rather interest Prices that people are interested in playing, and act like magnets. Sometimes a support or resistance line is an interest area. When we push through it that area is no longer an area of interest and we push further or reverse until we find one. Sometimes they are high volume nodes. Sometimes you can only see it by watching the DOM. The key is they are areas that people are interested in playing both ways. I take positions in areas of low interest, and return them to areas of high interest. That's where I know I can get filled, and I exit my position.
So in the case of support/resistance I take a position on it testing the level, and get out right before it touches it. I don't care if the level holds or not.
That was a good analysis on how price tends to treat areas of acceptance like a magnet, and move from areas of rejection towards acceptance. Or in today's price action on the ES-through an area of rejection towards the next lower area of price acceptance.
I don't really use charts so it's not an area where I actually pay a lot of attention to. More importantly support and resistance are great areas where the game is played by bigger players. It's a great way to unload and accumulate product . Big traders are rarely loading up playing support and resistance the same way that retail players do. They tend to accumulate at different areas and they also tend to liquidate at other areas as well.
Once had communications with an institutional trader. They would not consider a trade till price reached monthly levels to do exactly like you stated in your comment. I think you summed it up perfectly.
A good support and resistance level is an area you should expect a reaction. "My view point" It will either hold or break. But know that many traders are sitting on their hands till those levels are reached. That is why I believe they work.