Support and Resistence description

Support & Resistance systems are designed for sideways or directionless markets, and they typically have the following attributes:

  • They buy low and sell high in an attempt to take advantage of the sideways price movement characterizing directionless markets.

  • They have a high number of winning trades, with small profits on each trade. They sell as the market goes higher and take small losses until the market finally turns down and results in a profitable trade.

  • They are easier to trade emotionally.

  • By design, these systems miss the big move

  • They usually have small profits and larger losses as markets trend. The system keeps shorting a market that is in an uptrend or buying a market that is in a downtrend.

Therefore, when traders use Support & Resistance systems, they use them within a group of systems that also includes trending systems and perhaps one or more volatility systems.

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