Price Action Trade

Prof. S. Thilak, Assistant Professor, MBA , SANSAC

Support and Resistance
Support and resistance simply refer to price levels on a market thinking of high probability of showing reactions those levels. Historic price reactions are the ways to identify support and resistance for future use. Support level are areas we expect there to be a lot of buyers and resistance levels areas where we expect there to be a lot of seller. One has tended to find that important level in the past are often reaction areas when the market revisits. As a price action trader, can identify these areas as price level to watch for potential trading opportunities. Look for interested areas that have shown to be significant historically and areas that have been used as both support and resistance.
Support and Resistance is very rarely an exact level instead, think of them as support and resistance zones. Support and resistance are somewhat subjective, never have the exact same areas marked as another trader. The most important point is that confident in particular zones, Building confidence through back testing forward testing and also live trading. Drawing in market movement can help to identify strong support and resistance level and train to spot them. A lot of people focus on the very highest level of price movement or the lowest level, but they are not always the key support and resistance.
Different time frames
There are different time frames which is based on the trader and the situation the most popular time frames are daily time frame, 4 hours time frame, 1 hour time frame, 30 minutes time frame, 15 minutes time frame and 1 minute time frame. There isn’t a definite time frame that one can trade, it happens based on once’s personal situation, trading style and suitability of the trader.
Higher Time Frames (Daily and 4 Hour Time frame)
This involves a less screen time than lower time frames, since if takes 4 hours or full day for each candle to print. This is suited to the people who works full time and don’t want to spend a lot of spare time on the charts. They have less trading opportunities which takes weeks or months for market to reach the areas . This can be frustrating which means if good setup misses, it can miss a large portion of year’s overall profitability.

Lower Time Frames (5 minutes and 15 minutes Time frames
This would be considered as day trading as lower time frames tend to offer more trading opportunities. Although this may seem more exciting as more trading opportunities can lead to more losses. It is easier to over trade but after a loss a market will likely to test another of your trading areas relatively, quickly and through frustrations any one start compounding mistakes as trades take less time to complete and in most instance trading is out on the same day entered and it requires more screen time. This means it is suited to people who can spend full day at the charts but they should only concentrate on one or two markets.

Mid Time Frames (30 minutes and 1 Hour Time Frames)
These are often seen as happy medium as they don’t require much screen time as a day trading, but do not require large stops as higher time frame trading still offers a good amount of trading opportunities and plenty of time to assess and analyse a market before placing a trade. Since each candle takes 30 minutes or an hour to print and it clears out a lot of market noise that can make lower time frame more difficult to read accurately. Trades can still last days and week; trader need not to sit and individually manage each trade and can stop sizes that are manageable with lower volatility, allowing for stops as low as 20-30 points frequently.

1minute time frame and lower
These are very fast and exciting, which can give more profits or more losses only if the traders are expert in it can opt these options unless they are ready to take huge risk.
If the trader is a beginner, learn what time frame suits you as you learn. Eventually settle on one that fits with situation and how you want to trade. The truth is, if one is trading using price strategy very often they can be utilised across different time frames without too much alterations.