How to use Support and Resistance Effectively - page 25
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...just continue please
Bubble
fantastic thread ,finnaly I found what i have been looking for a lot months,I hope this thread will be never ending story ...please continue...THANK A LOT
Peter
A question about stop losses.
Hi Bubble,
the charts speak for themselves, two trades with a potential profit of roughly 130 pips each.
I am wondering about setting Stop Losses though Bubble. I re-read this entire thread and found your response to Malcik,
"When you have identified an area of support look at how many minor swings there has been to this support ,enter on the second or third swing back to support , so the price would have to bounce of your area of support at least once and move higher then return to support place the stop loss under the low of the lowest swing."
If you have the time Bubble, could you please let us know where you would have placed the stop losses on one or both of those trades, that's assuming the trades were identified correctly of course.
With the eur/jpy trade I would have set the sl at around 163.94 the top that the price made before retracing.
With the gbp/chf the chart suggests a sl of about 2.4685.
I seem to remeber you mentioning that this system historically had a 7 - 1 risk reward ratio. ( I can't find the post right now )
Do you ever use the profit target for example in those to charts roughly 130 pips, to calculate a stop loss? I'm sure you will tell me to just use the charts s/r levels, but just wondering. Using say a 5 - 1 ratio on those two trades would suggest a sl of 26 pips.
Sorry for the long post and thanks for all the help Bubbles, have a great weekend.
"2820". post 276, 277
HI Bubble,
I am a little embarrassed but my first question is; I really don't understand your use of the number "2820".
Believe me when I say I have been trying!!!!
Please explain it, you know, for a dummie! ;-)
Sorry to drag up old posts.
Also I wasn't aware that a previous post could be edited. Now I know.
Thanks again, more questions comming.
mairangi
Bubble - Great thread. Read through it twice. A couple of places more than than twice. Can you check my understanding, which might be a useful recap for all reading:
1. Identyfing the support area for longs:
The top of the support area is defined as the previous peak (which becomes support).
The bottom of the support area is the swing down from that previous peak from which it swings back up and breaks it and forms the new current high. (The point 2 of a 123)
So if 50 is the previous peak. Price swings down to 25, then makes a new high at 75. Therefore 50 becomes top of support range and 25 the bottom.
2. How are you getting your exact entry point for your trade, once price is back in the new support range ?
3. I assume your stop is a few pips under the bottom of the range ?
4. What is the max pip stop you would use ? During a session like yesterday, there was often an extended range of swings. How tight can you get your stops ?
5. We should only take entries which agree with S/R turns on the higher time frame. So if I am trading the 1 hour chart, I would ignore entries unless it agreed with say the 4 hour turning points and was of course in the same direction of that higher chart ?
Sorry I have not worked out how to post a chart, hense the numerical example above.
Ta
I understand now...many thanks bubbles
onward ho!
mairangi,
i think it should of said 2.4820 but anyway it was a difficult one to judge and not a situation i would have traded ,as i have said many times if it doesnt look right leave it.
The markets have moved on, lets move forward with them.
bubbleOK thanks for that clarification Bubble.
Now I can work on clarifying my next questions.
mairangi
Refinement
Hi Bubble,
I would like to know more about your money management rules and also "how" the price action defines your stops.
mairangi
Quoting Bubble
'When a support area is established ,what i think you are asking me is how far can the price come into that support area .
Using the previous swing down and looking at the peaks and troughs within that swing will give you the answer you are looking for.'
fx2007:
So just so I am on the right track: That means looking at the 'intra' swings on a lower time frame ? If I am looking a the big picture on the 4 hour, I might use the 1 hr to see the 'intra' swings within that 4 hour swing? Then figure out possible entries ?
If I am assuming wrong that your stop might be below the range, can you make a comment on how you determine where it is.
Again Bubble, great thread. Have felt a surge of inspiration, since I started to read it. Have a good weekend and a good trading week next week.
The Ultimate Re-read!
Hi Bubble,
just finished re-reading the entire thread for the 4th time.
With placing trades using s&r this past week and all the different trades and questions posted by evryone I am amazed how everything becomes that much clearer on the re-read. You have already covered so much.
It really is good stuff. Many of my questions that have been brewing have been answered with this last read. Also the stevehutts stuff was a gem.
Good thing he perservered with questions untill he understood!
Thanks once again Bubble for great teaching........and patience.
mairangi
mairangi,
this thread is about s/r if you wish to learn about money management then there is plenty of free information out there.
As for price action defining stops ,it is common sense to place them below the nearest peak or trough from your entry point.
Read the post about range and the answer i gave to stevehutts with a detailed explanation and a pic.
bubblegood thread... worth reading..thanks!