Trading Support And Resistance Using Turnabouts Technique
In trading there are no money back guarantees. You make a mistake and the market never forgives you. Conservative trading or what you call low risk trading is what can compound your account over time.
Support and resistance trading using the turnabout technique comes close to having a money back guarantee from the market.
Support and resistance is one of the most important concepts that you need to master. Without understanding this key concept, you cannot master the markets.
Support is where buyers start buying thinking the price to be sufficiently low to make a good bargain. On the other hand, resistance is where sellers start selling thinking that the price has gone to high. Whatever, trading support and resistance means buying at the support and selling at the resistance.
A turnabout trader will wait for the confirmation that the suspected support and resistance will hold price before entering into a trade. So, a turnabout trader will wait for the actual turnabout of the price action at the support or the resistance level. This will reduce the number of trades that can be taken but the probability of success of these trades will be much higher than entering into a trade near the support and resistance on guesswork.
Turnabout strategy will take the guess work out of your trading. You will know precisely where to place the stop loss as you know the high or low the market made before turning around.
The downside to this conservative turnabout trading technique is that sometimes these turnabout traders miss on other valid support and resistance trades. Aggressive traders will enter into a trade when the price action nears the support and resistance. In some cases, market will move with such force away from the support and resistance that a turnabout trader will be sidelined while these aggressive traders will be in the money. Whatever, if you want to be conservative and on the safe side in your trading, you should wait for the turnabout before you enter into a trade.
Whatever, as a trader you should always use a cautious approach when you enter the market. It is the quality of trades that matter in the end, not the number of trades.
Article Source: FxTradingStock.com
About the Author
Mr. Ahmad Hassam has done Masters from Harvard University. Learn How To Make 100 Pips Daily. Learn this powerful Fibonacci Retracement method FREE that pulls 500+ pips per trade.
by: Ahmad Hassam
Total views: 45
Word Count: 384
Date: Tue, 11 Jan 2011
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