Support and Resistance zones are overrated

[dbphoenix]

I don't think it is a matter of definition.

Actually it's entirely a matter of definition. If one just slaps some random line on the chart, it is going to be less helpful than determining those levels and points beyond which traders could not find trades.

If one wants to delve into it more deeply, I suggest studying the man who came up with the concepts of support and resistance in the first place.

 

[GoldenMember]

Why waste your time defending S/R zones or any TA concepts for that matter.

Some people still believe the earth is flat.

Ignorance is bliss, some people are just happier being clueless. lol

 

[Money Trust]

Funny because I was going to post something similar about how random lines could look like s&r.. So yes it is overrated.. Some gurus on here will disagree with me loudly, but wont tell you how to profit from it. I think real time s&r is better than old s&r.. But I tell you this.. I absolutely hate trendlines as s&r.. They are the worst.. Good luck with that..

How to profit from it? Buy at support and sell at resistance and/or short at resistance, buy back at support. These are in a sense scalp trades. This may not always work because a supply and demand environment may be stronger than S&R at times.

 

[Crispy]

Define overrated in this instance.

 

[lotto]

As good a place as any to start understanding S/R:

http://stockcharts.com/help/doku.php?id=chart_school:chart_analysis:support_and_resistan

 

[Money Trust]

Define overrated in this instance.

Overrated as in one doesn't understand it so they make the claim that it doesn't work.

 

[pinkman]

This thread needs hindsight charts

 

[Crispy]

Overrated as in one doesn't understand it so they make the claim that it doesn't work.

Perhaps. Support and resistance levels are not hard numbers. It is a very subjective approach. I guarantee you I could show you mine. You show me yours and they are worlds apart. But that doesnt mean it cant work. Its all about r/r.

Also I think most of people have high expectation with regard to hit rate in most any strat they attempt. So maybe OP`s disappointment lies in there? All I trade is SnR within my model with a hit rate of a measly 38%. But hit rate means squat.....its the size of the winners when you catch a runner.

Admittedly its very hard to get beaten over the head 7 times in a row unless you have complete and total faith in your system and its ability to withstand those periods. But if you trade through enough of them to see the subsequent rally in your PnL higher than when the draw started with just one or two trades and you may see the light....

Good trading to you.

 

[Crispy]

hindsight charts

Isnt that redundant?

 

[Money Trust]

This thread needs hindsight charts

No need for hindsight charts when one can spot S&R in real-time. But maybe it's easier for me to do it since I trade off the daily charts instead of day trading.