Trading support and resistance levels is the single best way to increase the number of profitable trades that you take. In the Forex market knowing where these key trading levels reside can make a drastic improvement in your overall trading performance as they represent key levels where price is more likely to reverse.
Below I’ll show you a simple technique for drawing and trading support and resistance levels.
Identifying major support and resistance lines
Open the chart of a pair that you plan to trade, I like to draw my support and resistance lines on the ‘Daily’ chart
Use the zoom out feature until you are only looking at the overall structure of the chart.
Start drawing lines at the obvious swing highs and lows. When finished your chart will look similar to the image below.
Expand your chart to it’s original size.
That was simple, right?
Now let’s review a simple trading strategy that you can use to trade support and resistance levels.
Trading Support and Resistance Levels
Determine the directional bias of the pair that you are trading.
In this example of GBPUSD the trend is down, so we are looking for support levels that turn to resistance levels.
Identify a nearby support level.
Look for price to go through and close below the support level.
Next, wait for price to retest the support level, which now becomes resistance.
At this point, you place a SELL order for the pair.
Take a look at my short trade where I explain how to draw major support and resistance levels and show an example of the trading strategy described above.
Love it or hate it, non-farm payroll is announced each month — unless the government has decided to take a hiatus. And no active intra-day trader worth his/her salt would dare to ignore this time period which almost always leads to high price volatility. During the days and weeks leading to the non-farm payroll announcement you will find all sorts of contests and opinions forecasting the job report outcome. And usually, traders will find themselves in one of 3 categories: overjoyed about the profit potential, stressed about the potential draw down of their capital, or indifferent because they would rather sit on the sidelines during NFP.
Regardless as to which category that you fall in, if you want to improve your trading skills then you need to continuously improve your trading knowledge and practice practice practice.
This past non-farm payroll resulted in a double-digit percentage increase to my account balance. And I am going to share with you some quick tips on how I planned and executed my non-farm payroll trade.
Identify the trend
Determine which direction you plan to trade in based on the trend on a higher time frame. For example, if you are planning your entry using the 5 min chart, then use a higher time frame, such as the 1 hour or 4 hour to determine the trend direction.
Analyze your charts
Analyze your charts for key levels of support and resistance to determine if you expect for price to continue in the direction of the trend or reverse.
Calculate your risk
Always calculate your risk before entering a trade. It’s easy to imagine the buckets of cash that you will earn from a single trade, but you should always remember that in trading — anything can happen, at any time. This is such an important tip for becoming a profitable trade. Your first priority is to identify and manage your risk on every trade.
Plan your entry and exit
Plan to enter on a swing high — if you are selling, or a swing low — if you are buying. Plan ahead and know prior to entering the trade your entry and exit price, and be realistic. Not every non-farm payroll announcement is going to send price skyrocketing to the moon or plummeting to the deep sea.
Watch my video on how I traded the last Non-Farm Payroll announcement.
If you’ve watched my previous videos, you’ve probably seen me take a number of intra-day trades. However, I also do a fair amount of swing trading as they offer me complete freedom to spend time with my family or work on content for my new trading alert service all while earning passive income.
This week, I am showing you an example of the type of trade alerts offered to members of my Extraordinary Trading alerts service. This service is perfect for busy people who do not have the time, or desire to sit in front of their computer, waiting for trade setups, or managing trades. Or for those who do not have buckets of capital to lose while learning to trade. I do all (well almost all) of the work for you. I sit down and spend hours analyzing charts and identifying high probability trade setups for you. I then send you the entry, profit, and stop loss prices, as well as updates on when to adjust your stop loss (to lock in profits) or close out your position if market conditions change. Your job is to enter the orders communicated into your Forex platform and wait for either your profit target or stop loss to be hit. Pretty easy right?
So, what are you waiting for?
If you are still on the fence about whether or not to join my trade alerts membership, take a look at the video that I just posted and discover how much wealthier you could have been if you had received one of my “set and forget” trade alert setups and walked away with a handsome 300 pip profit!