Trading made Simple #3 - Support and Resistance

What's the best price to enter the trade?

To simplify...

• Support levels are prices that we feel that market won't go below
• Resistance levels are prices that we feel that market won't go above

Support and Resistance levels are considered floor and ceiling in the market. These levels are the zones where we make decisions whether to enter the market or cash out and take the profit.

So when to enter the market or take the profit? That's when psychology comes in to play and we patiently look at the market as it approaching those levels.

Support

• enter at support level
• take your profit at support level if you have been short

Resistance

• short at resistance level
• take profit at resistance level if you have been long

To better visualize support and resistance levels you can draw lines on your charts

What you need to look at are previous major highs and lows as these are most likely your support and resistance lines.They are easily spotted even for a beginner and don't require any specific tools. What's important is that they work because people tend to respond to them.

Let me know if this post was helpful and as always ....Happy Trading !!!