The idea of trading support and resistance is really interesting. Many traders want to learn more about it, while other traders think that they are trading it, but the sad truth is they are not doing it correctly.
The importance of these areas are that you can buy or sell in the most advantageous opportunities. This helps bring confidence to a trader, because they know that they are quintessentially trading with the “buy low, sell high” mentality.
If you’ve traded a while, you’ve probably have run into these indicators that automatically lug support and resistance lines on their charts for them. The indicators form these support 1, 2, 3 and resistance 1, 2, 3 lines on the charts. These are terribly inaccurate.
All these are, are just mathematical formulas. This has nothing to do with support and resistance, any more so than just randomly choosing a price and proclaiming it as support or resistance. There may be some coincidences where the price will stop in these areas, but that’s all they are: coincidences.
When it comes to successful traders, they can just see support and resistance. They don’t use indicators to tell them what they already know.
All it really takes to achieve this, is to see the market from a new set of eyes. You have to understand the markets movements. The more volatile the market moves, the easier it is to spot support and resistance. The more stagnant the price movement is, the harder it is to spot. Start today by getting rid of all your indicators, and sit down and watch (really watch it) the market. You’ll be amazed at what you’ll find.
John Templeton has been a successful forex trader after getting a proper forex trading education. Once he understood that all he needed to trade forex was on a plain chart with no indicators, his profits soared. Article Source:http://www.articlesbase.com/investing-articles/trading-support-and-resistance-why-its-so-important-1011333.html
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