Support and resistance level is the most important trading parameter. But do you think that all the traders are well aware of this? The simple fact is, only a hand full of traders can find the trading support and resistance level. As a currency trader, you should know that all the support and resistance levels are not for executing the trade. In fact, the professional Aussie traders only trade few important levels in the market based on other parameters also. If you think that you can become a successful trader simply by using the knowledge of support and resistance level then you are completely wrong. In order to find your entry point, it’s highly imperative that you learn about the other essentials parameters of this market. Let’s discuss some essential elements which will help you to find a suitable trading spot.
Support and resistance are not specific levels
The retail traders often consider support and resistance as specific levels or as the whole number. But in reality, you should consider support and resistance as a zone. Try to use the key swings of the market to find the exact place where the price might reverse. But during the event of high impact news releases, you will often see some false break of the critical zones of this market. So how do we avoid that false spike and save our investment? The answer lies within the price action trading system. If you learn this system then you can use the reliable price action confirmation signal to trade the key trading zones. But when you do your technical analysis and look for reliable candlestick pattern make sure that you are using the higher time frame data. It’s true that some articles and books will tell you that trading the lower time frame is the best possible way to make money. But in reality, this is the easiest way to lose your entire trading account.
Use of multiple time frame analysis
Multiple time frame analysis is very popular among the professional traders. In fact, without doing the multiple time frame analysis they never place any trade in their online trading account. In the dynamics of this market, it’s really very hard to find the best quality trading signals. In fact most of the time you will have to face many losing trades due to false trading signals. But just by doing the multiple time frame analysis you can significantly improve trading performance within a short period of time. Drawing the key support and resistance level will also become very easy for you. However, at times you will not find any clear signal by doing the multiple time frame analysis, in that case, it’s better to stay on the sideline. Always remember that this market will be always there for you and there is no point of risking your trading capital on low-quality trading signals. Expert traders at Saxo often wait for weeks only find one good trade.
Develop a balanced trading system
To trade the key support and resistance level you need to have a balanced trading system. But the word balance we mean that your trading system should take care of all the trading parameters. The system must look at the fundamental analysis sections since it is one of the best ways to measure the strength of the existing trend of the market. At times you might ignore the fundamental analysis but remember that without assessing the fundamental conditions of the currency pair it will be impossible for you to make a consistent profit. Work hard and learn all the three major analysis in the Forex market.
Support and resistance level is a little bit tricky and it can be very challenging for the new traders. You must educate yourself with the proper knowledge of this industry or else it will be hard for you to make a profit on a regular basis.