If you’re not new to trading, you’ve probably heard of it many times. This is really important, so if you do not understand how to buy low and sell high, I hope this article will open your eyes and give you one of those “oh yes” moments. My most consistent gain began to appear when I began to focus on this strategy as my number one entry method. No matter what strategy you are currently using, if you consistently make money, you will probably find a way to enter the market in the long run in the downtrend area or in the small market in the main uphill area.
If you are still with me and you still do not understand what I am going to publish, then this may be the most important article you have read in learning to trade profitably. It doesn’t matter if you trade on intraday, daily, weekly or even monthly charts, because the price reacts the same way on all charts.
I’m going to challenge you to look at what’s happening on your chart for a few days or weeks, depending on the time frame you’re trading on. See for yourself if what I am going to talk about is not easily recognized and marketable. It is relatively easy to look at almost any chart if you know and understand what you are looking for. You can also use weekly and monthly charts and trading options with this strategy if you prefer
First find your main support and resistance areas and draw lines there to help you see easily. These areas will in most cases consist of double tops and double bottoms, but you may notice that prices in this area have already reversed more than once, and if so, you will already see what I am referring to when I say prices will be almost always. Bounce at this level. You will also see that prices will reverse the trend many times in this same position. Once you have identified these important areas, you simply wait for the price where you want to buy or sell.
When you find a strong support or resistance area, look at it as a great opportunity to enter the market with the opportunity to buy low or sell high, because that is what you will do. In addition to following one of the most important rules of trading, you will also find that you can enter with a relatively small security stop, so there is another advantage to entering these positions. I’m very good at it so I often blindly buy these areas to know what the prices are going to be when they get there, but if you are not able to do that then just wait for a trend bar at your entry and when the bar is finished and closed Enter just above the bar or just below it if it is long.
Once you enter, your goal is to try to get out a part of the trade, because although the prices will probably be hesitant to reach these important prices, they may not always go our way in our preferred direction. Each market is different, so take a closer look at the market you are trading in and study the areas of previous support and resistance until you have been in the trade for a long time until you realize how safely you can cut your hair. If prices usually bounce a dollar in a stock of your choice, then don’t go for the full money. Try and get half or three quarters of the bounce so you can keep your win percentage high on the scalp portion of the trade. I prefer to exit half of my trade with a safe scalp, and then I remove my stop on the rest of my contracts or shares and hang firmly in the hope that I can take a big step. Using this strategy, what happens after the skull is closed is not considered, because trade is risk-free at that time. The worst thing that can happen is that prices will come back and take your break and even stop the rest of the trade. However, you will make money from the scalp part of your trade.
Many traders hate to see trading ranges because they feel that they cannot make money during this pattern because the market is not moving or trending. If you learn to understand that buying and selling strong support and resistance is actually the easiest way to make money, then you will start to enjoy and wait for these trading ranges like me. I often buy at a lower price and sell more than the height of the trading range knowing that the chances of at least a small bounce on both ends are extremely high. If and when I make a mistake, my stop is short and I lose very little, so I find that trading in this way gives me the best of both worlds, which is a very high winning percentage and a very small security off if I make a mistake.
If you are already using this technique to trade in some choppy markets, especially when it comes to ES, YM and NQ futures, I strongly encourage you to come up with some charts and test it for yourself. You will be happy and you will probably improve your trading results as well. Most importantly, you will force yourself to buy low and sell high, where real money is made while trading in the market!