Trade through the levels. How to trade right?
Bounce off level
The name itself speaks for itself. Price bounces off level. It follows that the entry into the market should be implemented after the rebound. A lot of traders make the mistake of setting the order on the level. Such traders expect the opening of the position. Of course, it works, if you set the order at the level of the line, the price will be better, but everything is always in search of the golden mean between the possible profit and the risk that the level of price breaks. You need to be sure that the level of market power stand. It would be better if you do not take a position as soon as the price level. It is better not to hurry. But when prices rebound - safely open the deal.
Breakdown level: an aggressive approach and a conservative approach
Imagine if the world was perfect. Here the support and resistance levels have always - in such a world, we would have you opened only those transactions that have already tested the price and, accordingly, would receive a very good profit. But the world is not perfect, and the price levels of their way. That is why the hope for a rebound to make a profit is not enough. You need to keep abreast of developments, if the price breaks the level.
In trading on the levels of breakdown, there are 2 approaches: conservative and aggressive.
conservative approach
Imagine you decide to open a long position on the currency pair EUR / USD. Are you sure that this currency pair will move up after the rebound, but later watch as the price breaks the support, and it is clear to you - your losses increase. What would you do in this situation? Of course, rely on luck is no longer necessary, and should be closed is not profitable for you to stand.
If you decide to keep the loss, with the hope that the pair will grow, then you will understand the essence of the conservative approach. It is important to understand that as soon as you close your position, for the market, simply put, you open the opposite position. As soon as the breakdown happens, most market participants are actively selling losses and, accordingly, the price crashes, but after you close your position, supply and demand will come back again and the price rebounds. After that the price will already be close to the level that it has broken. The price will fall again. That is why the support turns into resistance and this happens immediately after the break, and vice versa. This situation must be able to turn in his direction, but it needs to be very patient. should not rush to open the position as soon as there was a breakdown. It is better to wait until then, until the rollback will happen to breakdown, and just wait for the next rebound - can open a position.
aggressive approach
One of the easiest ways to trade on levels of breakout - purchase / sale in those moments, when the price goes through the levels. It is worth noting that price zone must pass very confident that the levels as broke as tablets, after udalat Bruce Lee.
And finally, it should be noted that the penetration levels are observed rarely. The situations are different. There will come a time when, after the break, the price will move in the same direction and no rollback will occur. In this regard, necessary stop-loss. And remember, do not believe in a losing position. The market does not spare anyone.
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