Most traders think that they act support and resistance.
But in reality they simply draw random lines on a graph.
And that is exactly why so many are stopped just before the market starts in the direction they had expected.
In this message I will explain:
- What support and resistance are real
- Why they fail so often
- The method I use instead, the one who gave me my most consistent victories and the highest risk-to-release trade
Let’s get started.
What support and resistance are actually
Let’s start with the basics.
Support is a price surface where the market has difficulty going lower. When the price falls into this zone, it often bounces up again.
Resistance is a price surface where the market is struggling to go higher. When the price in this zone rises, it often falls back.
When support breaks, this can be resistance.
And when resistance breaks, this can be supported.
Most traders understand this concept.
But then support and resistance come with some problems.
Let’s discuss that below.
3 problems of support and resistance
Here things go apart in real market conditions.
The problems with support and resistance are:
i. They are subjective
No two traders attract them in the same way.
Some use the wick, others use the body and some mark the entire region.
The result? Inconsistent results.
Ii. They are liquidity zones
Smart Money knows that retail traders place a stop loss just below support or just above resistance.
So they use these zones to hunt stops and catch traders.
III. They fail more often than admit people
These levels are not walls. They are just areas where the price has responded earlier.
If the market wants to go through it, this will, regardless of how often the price there bounced in the past.
Think about it:
How often have you placed a trade with support or resistance, only for the price to stop and then to turn in the exact direction you expected?
That’s not bad luck.
That is how the market works.
But in the next subdivision I will show you what I use instead of support and resistance.
Support and resistance alternative: Psychological levels
Instead of trusting subjective lines, I concentrate on psychological.
These are round figures that are of course attracted to the market.
Institutions and major players often take a profit at these levels, making them powerful reversal points.
- In ForexPsychological levels are the last three digits after the decimal: 000, 250, 500, 750.
- In crypto (such as Bitcoin)They are the last three digits for the decimal: 000 and 500.
This is how that looks like:
| Pair | 1st level | 2nd level | 3rd level | 4th level | 5th level |
|---|---|---|---|---|---|
| Euusud | 1,16000 | 1,16250 | 1,16500 | 1,16750 | 1,17000 |
| GBPJPY | 198,000 | 198.250 | 198,500 | 198,750 | 199,000 |
| BTCUSDTT | 188,000.59 | 188,500.54 | 189,000.48 | 189,500.97 | 190,000.85 |
But here the catch – they are not blindly exchanging these levels.
I will explain what I mean by this in the next section.
Keep reading.
How I exchange psychological level (with confluence)
Psychological levels can only lead to numerous false transactions.
That is why I only exchange them if they match confluence factors.
Confluence in trade means that different indicators or analysis methods combine in the same direction to strengthen the reliability of a trade setup.
The factors I work with include:
- A demand or supply zone At or near that level
- A break in the structure leading to the level
- A swinging – Price grabs liquidity at the level before you return
When all three alignment, the setup has a much higher probability.
It offers a better risk-to-release ratio than just trade in basic support or resistance lines.
Support and resistance versus offer and offer: deleting the confusion
Confuse a lot of traders Support and resistance of Supply & Offer zonesBut they are not the same.
- Support and resistance: Reaction points where the prize bounced or dropped in the past.
- Offer and offer: The origin of strong movements, where settings placed large orders.
Supply and supply zones are more precise, more reliable and much more powerful in combination with psychological level and liquidity concepts.
Last thoughts
If you struggle with support and resistance trade, you are not the only one.
The reason that these levels fail so often is not because you are unlucky; It is because they are designed to catch retail traders.
By shifting your focus to psychological level, combined with supply and supply zones, structure breaks and lubricity wiping, you start to act alongside smart money, not against it.
Do you want to see exactly how you can use this strategy in real time?
Become a member of our private trading community, where we share these types of setups before they even take place.
You can also become a member of our mentoring session And are trained to be a pro -trader.
You can view our commercial calculator To help you act safely.
Now, to you. Let me hear from you:
Are you an avid user of support and resistance? How did you succeed?
Which other confluence factors do you use?
Let me know in the comments below.
#Stop #support #resistance