How to use barriers (support and resistance) in trading

Antonis Nicholas

| Sunday, 26 May 2013 21:05

Hi Everybody!

I would like to discuss the use of Barriers in trading.  These barriers are known as Support and Resistance.  I use the word barriers because a support can turn into a resistance and vice versa.  The important thing to know is that there is a barrier in place.  They can help in opening and closing a trade.  We will discuss how to locate them and how to use them in your trading.  Stronger barriers are usually broken during important market news and events.  The candlestick must close beyond the barrier to consider it broken.

How to find barriers:

There are several ways to locate barriers.  No matter what method you are using, when you look at a chart, it is a good idea to start from a long term time scale and make your way to shorter time scales or the scale you are looking for.  Doing this, you can mark barriers as you see them.  A barrier can be located when the price has difficulty breaking through a particular price several times throughout its movement.  As you make your way to a lower time scale, you will likely see previous barriers that affect shorter time scales as well.  See the example below:

WEEKLY

DAILY

4 HOUR

HOURLY

Another method is using the Fibonacci analysis.

The Fibonacci theory explains that everything has natural levels using the Golden Ratio for example a snail shell.  This will show you the natural barriers present in each graph according to the Fibonacci Analysis.  These levels are created by drawing the Finacci Retracement between the two end points.  The key Fibonacci ratios are 0%, 38.2%, 50%, 61.8% and 100%.  Overlapping lines, are seen as stronger barriers while the key ratios are the “natural” barriers.

WEEKLY

DAILY

4 HOUR

HOURLY

Why they are important and how to use them in trading.

When we see these barriers, we understand first that the market has difficulty breaking them.

For example, this means it will be difficult the open a BUY trade with a barrier 10 pips above our open price.   Accordingly, it is expected to rebound off of it and go against the position.

Likewise, we can use the barrier to make a trade. Using the same example, to open the trade as a SELL position with the expectation that it will rebound and this time go with the position.  Here we can also use a smaller Stop Loss to reduce the risk.  The amount of the Stop Loss depends on which time scale you are using.  The bigger the time scale, the bigger the Stop Loss will be.

In the example below, you can see how the two barriers played a very important role.  At the support (lower barrier), a trade could have been opened with the expectation to reach the upper barrier (the resistance).

As you can see below, again on an hour chart several hours later, we see that the price hit the barrier (at about 1.2920) on its way up, fell back down to the other barrier(about 1.2900)  and again proceeded upward to the “1.2920″ barrier having difficulty in that area.

I hope this is useful to you and I would enjoy answering any questions or feedback you have!

I look forward to your feedback,

Antonis http://openbook.etoro.com/antonisn

Social Investment Specialist

Get Adobe Flash player

Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities. Visit Us www.deryworldscorp.web.id Visit Us www.deryworldscorp.asia

Ask yourself, what type of Investor am I?

Steve Hutchins

| Friday, 24 May 2013 19:45

Understanding what type of investor you are is key to understanding how you approach the markets.

Scalper

The “gamblers” of the industry. Often relying on “gut” feelings and emotions or, attempting to jump in to “major” news announcements. Usually disappointment ensues because of liquidity issues at these times. Quite often they will open direct “Hedge” positions in the same pair, to attempt to capture the market one way or another (this doesn’t work either). Scalpers come and go, some get lucky for a while but inevitably their success is short lived.

Many new investors begin this way and then mature into day or swing traders, with knowledge and experience. This type of trading requires full time monitoring of the markets, with open/close of many positions daily, to make small profits, usually with high leverage (risk).

Day (intra-day) traders

These investors usually open positions within 1 trading session or day, their positions are not held overnight. They set positions with stop losses and take profits (although, many will never reach these limits) these investors will check their positions regularly throughout the day and close positions before their SL/TP. As investors, sometimes it’s easy for day traders to forget to look at the bigger picture of the overall underlying trend.

Swing traders

Swing traders generally have a longer term picture and strategy, they are happy to invest with a realistic stop loss and take profit. They usually understand that, it will take time to get the returns they are looking for, therefore, are quite happy to leave their positions open for a number of days or even weeks, to allow the markets to reach their targets. Usually they will accept that their positions will be in loss at some point and lower leverage is used, so are generally less emotional/impetuous about the markets.

Term Traders

Are usually well balanced investors that hold positions for weeks or even months. They have a market strategy and they will stick to it. Usually lower leverage with larger margin values. These investors understand that big gains come from big movements and these come with time.

And now meet the new breed of Investor:

Copy Trader

For Investors that do not want, or cant, make the time to learn the complexities of the markets. Or investors that wish to diversify their portfolios and limit their risk. Simply choose the Top Preforming traders for the Risk levels that suit them. These investors are happy to do their homework on the returns of another investor and let their investments follow.

Investments should still be monitored and not just assume that past performance will be repeated. Losses should be understood and accepted that this is all part of any investment. ImpetuousCopy Traders that constantly “jump ship” at the first loss will find it difficult to maintain performance.

What type of trader are you?

Trading takes time, patience and discipline please don’t hesitate to contact me on the openbook to answer any questions you may have. SteveHu

Get Adobe Flash player

Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities. Visit Us www.deryworldscorp.web.id Visit Us www.deryworldscorp.asia

FXPRO : Daily Technical Analysis - Pre US Open - 6th May 2013

PRE US OPEN, DAILY TECHNICAL ANALYSIS, 06 MAY 2013

EUR/USD GBP/USD USD/JPY AUD/USD GOLD CRUDE OIL

Please note that due to market volatility, some of the below sight prices may have already been reached and scenarios played out.

EUR/USD INTRADAY: UNDER PRESSURE. Pivot: 1.315 Most Likely Scenario: Short positions below 1.315 with targets @ 1.3075 & 1.3035 in extension. Alternative scenario: Above 1.315 look for further upside with 1.318 & 1.322 as targets. Comment: the pair stands below its new resistance and remains on the downside as the RSI is badly directed. NEXT » GBP/USD INTRADAY: THE BIAS REMAINS BULLISH. Pivot: 1.554 Most Likely Scenario: Long positions above 1.554 with targets @ 1.5605 & 1.5635 in extension. Alternative scenario: Below 1.554 look for further downside with 1.551 & 1.547 as targets. Comment: the pair has struck against its resistance and is facing a pull back. « PREVIOUS | NEXT » USD/JPY INTRADAY: THE UPSIDE PREVAILS. Pivot: 98.8 Most Likely Scenario: Long positions above 98.8 with targets @ 99.5 & 99.75 in extension. Alternative scenario: Below 98.8 look for further downside with 98.4 & 98.1 as targets. Comment: the pair remains on the upside and is approaching its resistance. « PREVIOUS | NEXT » AUD/USD INTRADAY: UNDER PRESSURE. Pivot: 1.029 Most Likely Scenario: Short positions below 1.029 with targets @ 1.024 & 1.022 in extension. Alternative scenario: Above 1.029 look for further upside with 1.032 & 1.0355 as targets. Comment: as long as 1.029 is resistance, look for choppy price action with a bearish bias. « PREVIOUS | NEXT » GOLD (SPOT) INTRADAY: FURTHER ADVANCE. Pivot: 1463.00 Most Likely Scenario: LONG positions above 1463 with 1486 & 1491.5 in sight. Alternative scenario: The downside breakout of 1463 will open the way to 1441 & 1418. Comment: a support base at 1463 has formed and has allowed for a temporary stabilisation. « PREVIOUS | NEXT » CRUDE OIL (JUN 13) INTRADAY: FURTHER ADVANCE. Pivot: 95.35 Most Likely Scenario: LONG positions above 95.35 with 97.2 & 98 in sight. Alternative scenario: The downside penetration of 95.35 will call for a slide towards 94.7 & 93.55. Comment: the RSI has just landed on its neutrality area at 50%.

Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities. Visit Us www.deryworldscorp.web.id Visit Us www.deryworldscorp.asia

eToro : Daily Equity Prices and Market Overview

January 12th, 1:15 am by petros 

---

Today a big stimulus In Japan supplied some optimism about future business activity and Charles Plosser of the Philadelphia Federal Reserve repeated that he thinks that world’s biggest economy will grow during 2013.  In addition, Plosser said that the unemployment rate will fall by the end of the year. Although, this was not enough to keep the US indices up which came in mixed after weak economic data from imports and exports.

Yesterday’s press conference by ECB President Mario Draghi had an impact today on European equities which rose today. Draghi’s statement that Europe’s economy will most likely recover in 2013 has raised optimism of investors who think that finally the global growth could be achieved this year.

The DJ30 closed at 13,471.53 gaining 0.31 points (0.00%), SPX500 closed at 1,472.05 declining 0.07 points (0.00%) and the NASDAQ100 closed at 2,748.26, gaining 4.08 points (0.15%).

The CAC40 closed at 3,706.02 gaining 2.90 points (0.08%), FTSE100 closed at 6,121.58 gaining 20.07 points (0.33%) and DAX40 closed at 7,715.53 gaining 7.06 points (0.09%).

Microsoft Corporation (MSFT) has released Skype 6.1 for Windows. With this version, users can interact through Skype IM sessions and phone calls with their contacts from Outlook directly from the application. All profiles that are inside user’s Outlook now appear in Skype, with the same status. Also the user has the choice to call any number from his contacts by just pronouncing it. The contact needs to be listed only in user’s Outlook list without necessarily be in Skype

Stocks Execution Prices:

Name	Sell	Buy	Closing Rate	Change %
Apple (AAPL)	519.93	521.06	520.30	-0.61
Google (GOOG)	738.43	740.08	739.99	-0.20
Facebook (FB)	31.53	31.57	31.72	+1.34
Microsoft (MSFT)	26.89	26.96	26.83	+1.40
Amazon (AMZN)	267.17	267.78	267.94	+0.98
Yahoo (YHOO)	19.27	19.32	19.29	+1.58
Zynga (ZNGA)	2.57	2.60	2.59	+4.44

Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities. Visit Us www.deryworldscorp.web.id

eToro : Daily Equity Prices and Market Overview

Trade forex with eToro and get up to $1,000 forex bonus! Open a forex account today with a minimum deposit of just $50

January 5th, 1:00 am by Samir Bouazza 

---

Today U.S. indices rose as the non-farm-payroll report indicated that employers were hiring at a steady pace in December. The Labor Department said jobs increased by 155,000 last month which is just below the level in November. Gains in employment varied greatly throughout the economy, from healthcare to construction and  manufacturing. In addition, the Institute of Supply Management released data that showed the service sector in the U.S. grew at its most rapid pace in the past 10 months in December, boosted by an increase in new orders.

Today European indices hit new 22-month highs after data indicated the U.S. economy is recovering but not growing enough for the Federal Reserve to stop its monetary easing program.

The DJ30 closed at 13,432.67 gaining 41.31 points (0.31%), SPX500 closed at 1,466.47 gaining 7.10 points (0.49%) and the NASDAQ100 closed at 2,724.49, declining 7.77 points (-0.28%).

The CAC40 closed at 3,730.02 gaining 8.85 points (0.24%), FTSE100 closed at 6,089.84 gaining 42.5 points (0.70%) and DAX40 closed at 7,776.37 gaining 19.93 points (0.26%).

Apple Inc. (AAPL) shares have continued its downtrend of recent months and are pressuring the Nasdaq index. Another factor that is increasing worries about the company to create innovative products is that Samsung Electronics Co Ltd is likely going to increase its lead over Apple in global sales of smartphones this year by 35%. Many analysts believe that future of the company depends on the release of a new product line. Many analysts think that the iPad mini is not new enough to change the bottom line of the company.

Stocks Execution Prices:

Name	Sell	Buy	Closing Rate	Change %
Apple (AAPL)	529.10	530.29	527.02	-2.78
Google (GOOG)	739.02	740.29	737.97	+1.98
Facebook (FB)	28.71	28.78	28.76	+3.56
Microsoft (MSFT)	26.81	26.88	26.78	-1.72
Amazon (AMZN)	259.00	259.60	259.15	+0.26
Yahoo (YHOO)	19.88	19.93	19.85	+0.38
Zynga (ZNGA)	2.65	2.68	2.62	+8.71

Learn More About Social Trading

Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities. Visit Us www.deryworldscorp.web.id

You Can Become a Successful eToro Currency Trader

Trade forex with eToro and get up to $1,000 forex bonus! Open a forex account today with a minimum deposit of just $50

December 29th, 6:22 pm by Brett Chatz 

---

In order to be a successful currency trader, you need to first learn how to place trades without emotion.  It is easy to get emotional when you are putting your hard-earned money at risk but this is the worst thing that you can do as a trader.  When you place trades with emotion, you are less likely to use effective strategy and it is more difficult to make the correct trading decision.  This in turn will cause you to lose money unnecessarily and will simply deplete your trading account.

Learn from an Expert

If you are a new trader, your ultimate goal may be to become a professional trader.  Luckily, this has never been easier with eToro.  When you begin your currency trading experience at eToro, you will have the ability to see, follow and copy all of the top traders in the eToroOpenBook social investment network.  This allows you to see exactly what the best traders are doing and you will learn how to trade from first-hand experience.  When you have learned how to trade and have shown you can generate consistent profit then you will be invited to the eToro Guru Program which allows you to have copiers of your own.  You will also be compensated for having followers when you are accepted to the Guru Program.  Below is an image of some of the top Gurus on eToro’s OpenBook.

Learn More About Social Trading

Trading Strategy and Practice

It is always important for you to use proper currency trading strategies no matter what and where you are trading.  While there are many useful forums about currency trading strategies, these forums do not allow you to see and practice the strategy yourself.  With eToro, you will learn trading strategies directly from the Gurus and you will see how they implement their strategies in a variety of different situations.  You also have the option to open a practice account so you can practice these strategies without risking your own money.

Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities. Visit Us www.deryworldscorp.web.id