18/08/2010 20:19:21
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Answers 1-3 b
1,How do the pro's trade levels?
As entries and exits/SAR
Support is bought
Resistance is sold
Support breakdown sold
Resistance breakout – bought
Horizontal Levels –
Yearly, monthly,weekly, daily Highs,lows,closes and session opens etc
Levels are catalogued and commited to memory.
Levels are noted from historical data – horizontal levels. - The higher the time frame the better – stronger the level -
Levels of support & resistance are found on Yearly, monthly,weekly, daily, [NO!!!] charts [down to 1 min charts NO!!!], Historic levels such as highs & lows of each time frame chart,
Do not use levels from intraday bars - use Yearly, monthly,weekly, daily.
Predictive Levels – PIVOTS are used for exits and sometimes entries in combination with other factors – not usually traded on their own – that would be a pivot trading system
FIBONACI Levels - Historical levels can be traded: Yearly, monthly,weekly, daily.
This would be a fibonaccis system but levels of support and resistance handled the same way as horizontal
FIBONACI Dynamic Levels
Not really traded as such on their own – only in combination with other factors.
Dynamic Support and resistance
Opens,highs, lows, closes of daily charts, also repeatedly revisited levels, whole price numbers, levels /Fibinachi on all time frames,
The more often the level is used with combining time frames, the stronger that level can be, that said, perhaps yesterdays high which has not been used as a level for many months,
can be considered a turning point in todays market, in other words a very strong level, WHAT IS?
So before trading all levels shall be noted that are likely to effect todays market, AND HOW WILL THAT INFO BE USED? HOW IS A MARKET EFFECTED?
In levels trading you trade the levels – you research the levels and trade them –
In other systems it is good to know where major support and resistance is for many reasons - granted
2,How do the pro's trade the open?
if todays open is higher than yesterdays open , and the lead up to the open was bullish, we have a bullish bias, what did the market do the prior 5 trading days, are we in a trend,
are we at the top of a trend channel on a higher time frame, are we near a level of resistance if so go short when set up & entry allows,
OK so how do the Pros trade the open?
stay out the market until the open range is established –
There are many systems – they are called Open Range Breakout/ Trading Systems
They work along the lines of when the range is broken up – they are in up – oppsite for short…
stay out the market until the open range is established -
3,How do the pro's trade the trend?
Using Trend following systems such as: Moving average crossovers, trend line rejection, MACD Crossover, MA Crosses, trend lines, trend channels - they ride the trend. Higher time frames and trading time frames etc
Getting in on a pullback, or at a bounce off a trend channel, trade with the trend, proven higher probability trades, only in some cases not always the trick is “ what criteria do you use to judge if it is a high probability?”
by my own backtesting using ABC PIN BAR REVERSAL SYSTEM, - That is a mean reversion system with a trend element – not trend trading as such.- It is a hybrid Trend/Range trading system - it does do trend and counter trend trading
4, How do i trade the range?
Pros use Mean Reversion Trading systems + such as exhausted price conditions - slow stochastics, rsi, Bollinger extremes, range
In addition hybrids add in some trend elements perhaps for confirmation of entry
If price is at the top of the range/ATR LOOK TO GO SHORT, ATR is also used for go long
If at bottom of range + 100% ATR go long
But ATR is not essential – it is a combinable factor f
set targets near to max of the range, MIDDLE or EXIT at SAR/ other signalg
5,Do pro's use timing of any kind?
Session opens etc ok cool
1 hour
4 hour
360 Min
Yes time & price is crucial, Market opens, overlap of 2 major markets, 4 hour bars,midnight opens,
noticable repeated times of markets for placing a trade, such as the above –
there may be news anouncements and economic releases which fall on times and days
Pros may or may not trade these depending on their system
do not trade the 1st 10-30 mins of the open, to avoid whipsaw/choppy market conditions,
true (That is how to trade the open) stay out the market until the open range is established –
Pros also use time not to trade….
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