Wednesday, January 20, 2016

You Decide Scalp or Swing... Both Need Difference Plan

You have to decide what type of trader you are or want to become.

Do you want to trade from support to the next resistance picking off a lower amount of pips but with lower risk and with a higher $/pip value? 

This is basically "scalping" on the Worker time frame.
When you can do this consistently it is very rewarding especially when you ramp up the $/pips. Trading for 50 pips at $100/pip is a nice business.

If this is your style, then you need more S&R lines to show you where the nearest "problem area" will be.

If you want to be a swing trader and trade the swings, then you need less S&R lines which you can either use from Worker swings or Boss swings. 

This is not as simple as it sounds because price doesn't always follow past swings and starts putting in new swings at other areas of S&R.

If you want to be a trend trader and try to ride the trend from top to bottom this will require even less S&R lines as you will use major trend swings from the Boss and Big Boss.

So, in addition to understanding S&R, you also have to know your "style" of trading and how you use them.

For example, when I do an "ATM" trade, I always add ALL the S&R lines from the Worker. I put these on my chart in a "feint" colour so that I really have to look at the screen to see them. Then, I look at the Worker swings and where these coincide with a "feint" line, I darken the line to make it stand out.

When I am in "trend" mode, I ignore most of the Worker "noise" and only add Worker swings, again in a "feint" colour. Then I add Boss S&R in a slightly darker colour and,if i see the Boss and Worker S&R coincide, I darken the line again. 

Then I add Big Boss S&R again in a different "feint" colour and, again, where these coincide with any other line, I darken them again.

We all have different ways of showing S&R on our charts and it just comes down to personal preference. 

However, in addition to understanding S&R, you must know your trading style and how to use them.

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