Más contenido relacionado La actualidad más candente (20) Similar a Support resistance trading strategies - a comparison (20) Support resistance trading strategies - a comparison2. Support/Resistance Strategies
Support/Resistance Introduction
Support/Resistance (manually drawn)
Support/Resistance (automatic)
Pivot Levels
Fibonacci Retracements
New Highs/Lows
Using Risk/Reward Ratio in trading
Support/Resistance Zones
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4. Drawing Support/Resistance
(the manual way)
Resistance
Draw a line through as many highs as possible
without violating it (i.e. without a close above
resistance)
Support
Draw a line through as many lows as possible without
violating it (i.e. without a close below support)
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be reproduced without permission
7. Drawing Support/Resistance
(the manual way)
Resistance and Support change roles:
Resistance when broken turns into Support
Support when broken turns into Resistance
Hence, we can predict future Support/Resistance
levels based on past levels
Drawing support/resistance:
Draw a line through as many highs and lows as
possible with minimum violations
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be reproduced without permission
10. Determining the Strength of
Support/Resistance
How many highs or lows does it touch?
– The more the touches, the stronger it is.
Volume accompanied by break?
– The stronger the volume, stronger it is.
How recent are the touches?
– The more recent the touches the stronger it is.
How long is the support/resistance line?
– The longer it is, the stronger it is.
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13. Auto-Support/Resistance
(the automatic way)
Investar uses Artificial Intelligence (AI) to
draw support/resistance lines just like an
expert TA would
Rate the lines based on:
– No of touches
– Recency
– Length
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14. Auto-SR
Top 20 %ile - Very Strong Support/Resistance
Next 20 %ile - Strong Support/Resistance
and so on…
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16. Using Resistance & Support for
Buying
Resistance
Support
Break of Resistance Close to Support
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At start of new uptrend In a sideways trend
17. Using Resistance & Support for
Selling
Support
Resistance
Break of Support Close to Resistance
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At start of new downtrend In a sideways trend
18. Importance of various tools
Support, Resistance & Trendlines
Technical Indicators
Japanese Candlesticks
MORE IMPORTANT
LESS IMPORTANT
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20. Pivot Points (Day-traders only)
Calculated based on OHLC Data.
Today’s intraday levels based on
Yesterday’s OHLC data
Pivot Point (PP)
3 Support Levels (S1, S2, S3)
3 Resistance Levels (R1, R2, R3)
Valid only for intraday
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be reproduced without permission
22. Pivot Points vs Auto-SR
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23. Fibonacci Retracements
Horizontal lines dividing vertical distance
between 2 endpoints of a trendline by Fibonacci
ratios of 23.6%, 38.2%, 50%, 61.8% & 100%
How do you create them?
– Use Fibonacci Retracements tool to draw a trendline
between two extreme points
How do you use them?
– Fibonacci Levels indicate possible levels at which
prices may retrace.
– Use only when you see them successfully working on
some scrips in the past.
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be reproduced without permission
27. Pivot Points & Fibonacci
Retracements Guidelines
Mathematically calculated
Not based on actual supply/demand
Only rational is that they work because other
traders use them
Success rate will not be consistent and will vary
from scrip to scrip
Test them well before using on any scrip
When a software claims Auto-Support/Resistance,
ask them how it is calculated
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be reproduced without permission
28. New Highs/Lows
Previous High as a resistance
Previous Low as a support
Long-term trader:
New 52-week Highs/Lows
Short-term trader
New 8-week Highs/Lows
New 15-day/5-day Highs/Lows
Intraday trader
Above Previous Day’s High
Below Previous Day’s Low
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be reproduced without permission
29. New High vs Manually Drawn
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30. Risk/Reward Ratio
Risk/Reward Ratio
– Maximum Profit/Stop-Loss
Risk: maximum loss you can have.
Reward: maximum profit you can have.
3:1 Risk/Reward ratio means:
– Reward is 3 times the Risk.
High Risk/Reward minimizes your risk and
maximizes your profit.
Widely used by professional traders
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31. Risk/Reward Calculation
Risk: maximum loss you can have.
– Usually the Stop-Loss
– Depends on type of trade because your
expectation of gain is different based on type
of trade
– Stop-Loss is set to keep Risk/Reward ratio > 3
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Trader Type Ideal Gain Typical Stop-Loss
Long-Term > 50% 10%
Short-Term 15-25% 5%
Intraday 2-3% 0.5%
33. Risk/Reward Calculation
Reward: maximum profit you can have.
– long trades (i.e. when you buy):
Profit = (nearest resistance – close)
– short trades (i.e. when you short sell):
Profit = (close – nearest support)
Risk/Reward Ratio
– Maximum Profit/Stop-Loss
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35. Support/Resistance Zones
Nearby Support/Resistance lines can be
clubbed together to create a
Support/Resistance zone.
Using S/R zones instead of S/R lines can
improve accuracy
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36. Using Support/Resistance Zones
Buying on breakouts/breakdowns:
– Buy only if stock goes above upper resistance
in a resistance zone
– Short Sell only if the stock breaks down below
lower support in a support zone
Setting targets:
– Long (i.e. Buy): Use the lower resistance line
in the resistance zone as a target
– Short (i.e. Short Sell): Use the upper support
line in a support zone as a target
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38. Auto-SR with SR Zones
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be reproduced without permission
39. Interesting Composite Scans for
trending market
High Volume Breakout (at start of an uptrend):
– Very Strong Resistance Breakouts
– Volume Gainers
– High Risk/Reward Ratio (Long)
High Volume Breakdown (start of a downtrend):
– Very Strong Support Breakdowns
– Volume Gainers
– High Risk/Reward Ratio (Short)
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40. High Volume Breakout - High RR
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41. How can I get this feature?
Auto-Support/Resistance,
Risk/Reward ratio & Stop Loss were
released in FinBridge 2016 Mumbai
and were also highlighted there.
Available as an addon in Investar 5.4
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42. Liked Auto-SR?
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@himanshugpatil
@investarindia
Tweet with hashtag #AutoSR
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43. THANK YOU
Thank You for Attending!
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