Forex Strategies: Support and Resistance Secrets

What is Support and Resistance?

Along with Fibonacci, Trend Lines, MACD, Moving Averages, Support and Resistance strategies in Forex trading is but one of the most common Forex strategies employed by newbie and professional traders alike.

Having dealt with numerous Forex experts throughout the months of trading, it appears to me that different traders would have a slightly different concept on how support and resistance is identified.

Nonetheless, the basics should be the same:

The picture above depicts an uptrend zig-zag pattern of the market. You must understand that in Forex market, price hardly moves on a one-directional pattern. Assuming that the price is the endurance of a normal runner - he ran and took a breathe when exhausted, and then continued. Thus, the cycle of the zig-zag patterns repeat. 
 
 To determine the support and resistance of the market in an uptrend (and vice-versa for downtrend):
- When price moved up, and retrace, the "high" point of the market then becomes a resistance
- When the retracement is completed and the market gathered enough momentum to move up again, the "low" point then became the support
- Resistance is always on the high side of the trend, and
- Support is always on the low side of the trend. 

The Forex Trading Strategies Secrets of Support and Resistance

One of the secrets of apply Support and Resistance in your Forex trading is that Support and Resistance is - in contrast to common beliefs - being developed in "Zones". These zones may be anywhere from 5 to 20 pips clusters depending on the previous statistics. 

Many Forex traders failed to identify this fact and always attempt to pick pinpoint entries or exit levels. As a result, many of them have missed a lot of opportunities and risked their capital without fully understand the market. 

The next time when you are about to place an entry or a stoploss on a support and resistance level... Bear in mind that you'll need to include additional buffers. Don't be afraid to enter the market sooner, or set your stoplosses further away. It could mean a heck lot of difference to your balance sheet at the end of the day! 

Support and Resistance Secret #2

Support and Resistance are meant to be tested, and ultimately broken. When a support or resistance is broken, wait for the price to retrace a little and enter your position from there. Set your TP to the next corresponding support or resistance level.


Yup, that's the common trading mentality and it has been successful for me thus far. But what if there's a fake break? ...Like the on in that chart below:

The support is broken but price closes above the then-resistance level... What's your take? 


Some traders took their losses and moved on. Others won't accept the fact and adopted the wait-and-see approach. In this case, cutting your losses would be a wise thing to do, because you'd want to minimize your risk as much as possible.


But then? What's left after that? 


You see, when there's a fake break (proven when the price closed above your support and resistance zone, there's a good chance the market will move in a reverse direction... And that's where many Forex traders failed to take advantage of... 


Reverse your entry! Set your TP on the next resistance level and your SL on the low of the "fake break".


I have adopted Support and Resistance as one of my few regular Forex strategies and they have proven to be extremely effective. I hope you'll find my trading secrets as beneficial as they were (are) to me. If you found a profitable Forex trading system based on support and resistance and would like to automate it, don't forget to check out some of the tips in my Forex Software post. Happy trading!

Forex Software

Forex Software For Automated Forex Trading

There's no way anyone could trade 24/7 throughout the trading week. If you are the type who trade based on longer term (keeping trades on for days or weeks and beyond), then you probably won't spend much time in front of your trading screen on a daily basis.

Then again, if you happen to be day trading and waiting for your perfect entry in the Forex market is a problem. Meet Expert Advisor - Forex software that are programmed to do what you want them to do so that you won't need to be stuck with your trading desk...

The Benefits of Automated Forex Trading

Errr, how cool is that anyway? Train a robot to execute what you'd want to do - i.e. teach them your Forex trading strategies and they will carry it out without complaints, without fear, without greed and all sort of emotions. I'm gonna ask this again - how cool is that?

Experienced Forex traders would all agree that Forex trading can be extremely ruthless. On a winning streak? Greed strikes and you'd want moreeeeeee. Losing a couple of trades by now? Man, your fingers are shivering when you are pondering if you should be click that blue buy button... Oh, wait, issit the red sell button now? OMG! I'm late! It should have been a Buy, let's short it now!

Dang!

Another loser.


The above illustrations sound familiar to you but you're not alone. It happens to ALL of us. Forex trading is a bitch. Having said that, Forex software should be the "Holy Grail" of the Forex trading, correct? When MA1 crosses over to MA2it is a buy, and vice-versa. Oh, let's not forget to take profit when it reaches +50 pips... And SL automagically hit at, say 40 pips. Mmm, smart money management, eh?

Oh yeah, you have now found your money tree and da golden goose... Now what?

 How To Get Your Expert Advisor Software - Quick And Easy

No joke, pal, but don't get overly excited in this. First off, many of us do not know programming. We don't even know any other keyboard shortcuts other than Copy, Paste and Cut. 

Does that means the end of the world? Nope. You have heard that experts are spending millions of dollars to build a super EA that makes them money day after day, correct?

The truth is, you can hire a programmer on oDesk to build your own EA with limited budgets. Depending on the complexity of your Forex trading strategy, an full fledged EA - that comes with money management and a myriad of advanced features can cost anywhere from $200 to $1000.

If you only want a simple MA crossover systems, then its gonna be something like $20 to $50.
 I did a couple of projects with some oDesk outsourcers and the results have been great. I never imagined I could automate my trading systems with to such a level and the EA only cost me like $250.

... And I made over $4000 with that EA in 3 months, so its really a pretty good investment. I hope my blog post has helped clear your doubts about Forex software and led you to a simple and inexpensive way to materialize your Forex strategies. Good luck!