How to Trade with Simple Strategies
Has your chart ever gotten out of control, and looked something like this?
It’s a very frustrating working environment to trade with – you can’t even see where the actual price is anymore, and price is the most important data on your chart. Once a trader gets to this point, they usually end up wiping their template clean and ‘starting again’. Most traders will find themselves back to the plain price chart, and there is nothing wrong with that. It is at this point where you should have your “ah-ha” moment. Trading with a plain price chart is the simplest, most effective, and most commonly used approach in the trading industry today.
If you find your charts are getting out of control, then do yourself a favour, strip all unnecessary data off your chart template and start learning how to trade with the price action directly.
Even with a plain price chart, a trader can still get carried away and make a frustrating mess – and that’s exactly what happens most of the time. Marking support and resistance levels on your chart is one of the most basic, but vital skills you need to have to succeed with any Forex trading strategy.
Even fundamental traders who follow and trade the news, need to have a good understanding of how to draw Forex support and resistance levels to "complete" their trading analysis. Surprisingly, many traders – new and seasoned alike, continuously screw up their support and resistance line plotting and ‘poop in their own nest’ by going crazy with the way they go about marking levels on their chart.
Don’t Overcomplicate Support & Resistance
When you’re mapping out ranging markets, just stick with marking the upper and lower containment lines. They don’t have to be an ‘exact match’, where all the wicks or bodies like up perfectly – that’s very rarely going to happen. Just mark out the general area where price is turning.
In the example above, I am using the current GBPUSD daily chart which is currently stuck in range-bound conditions. All you should really be focused on is the main turning points here, where price is going to reverse and create a decent price move that you can capitalize on. Trading in the middle of the range is risky, price can get very erratic, unpredictable and volatile – it’s like a high-churn zone that can burn plenty money. But traders still try and do it, don’t be one of them. The most optimal point to catch a range trade is at the boundaries - so you mark them and only them. It’s as simple as that, if you don’t see a buy or sell signal at these main turning points, then wait until you do see one.
Sometimes doing nothing is the most profitable play you can make – and one of the hardest decisions to make, and see through.
Ranging markets are simple to work with, two levels that’s all you need. Moving markets, however, are a little different. I work with swing levels in a trending environment.
You see, even when you get these beautiful trends on the daily chart that seem to go forever and are an obvious buy or sell, many traders are still losing money despite how obvious things are. I truly believe the main problem comes down to timing. Losing traders are not entering the trends at the correct time, and getting screwed over by the corrections in the trend. Marking simple support and resistance levels can save your trading account from these mistakes. During trends, I mark out and concentrate on the ‘swing points’ - where old resistance becomes new support, or old support becomes new resistance. Time and time again, trend swing points will terminate the countertrend moves - it’s here you will more often than not see the trend pick up, and move into new highs or lows again.
Start looking out for and mark these swing levels – monitor them for buy or sell signals that align with the trend.
Check out the chart below…
This is text-book swing trading, which is taking advantage of countertrend retracements during a trending market. Notice how old resistance started to be respected as new support – this creates a swing level in the trend. It is generally the most optimal point to enter into a trending environment to get you maximum return on investment. It’s these swing levels that you should watch for buy or sell signals.
In this case we have some bullish rejection candles that communicated to the trader that lower prices were denied by the market at the swing level. This is a perfect ‘trend trade’ setup, it is a high probability situation that tells the Forex trader higher prices are very likely to develop…
Just remember, with a trending market you only really need to be concerned with swing levels.
Above is an example of how swing levels will work in a bearish environment.
Remember what I said before – levels won’t always line up ‘picture perfect’ - you just need to mark the general area where you anticipate will act as a main turning point on your chart. Don’t forget to mark major weekly turning points also, as they can stop strong trends in their tracks and kick off major reversals. Same deal, go the weekly chart and mark out any obvious strong reversal points.
Hopefully, I am starting to demonstrate to you the power of ‘simple trading’. There was no need for any complicated indicators here, or other over the top charting tools. It’s just working with a plain price chart, and being very minimalistic with marking support and resistance levels. Once you simplify the way you mark your levels, your technical analysis will become much clearer, less frustrating, and you will start to learn how to anticipate future price movements from a plain price chart.
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| Complicated Chart |
It’s a very frustrating working environment to trade with – you can’t even see where the actual price is anymore, and price is the most important data on your chart. Once a trader gets to this point, they usually end up wiping their template clean and ‘starting again’. Most traders will find themselves back to the plain price chart, and there is nothing wrong with that. It is at this point where you should have your “ah-ha” moment. Trading with a plain price chart is the simplest, most effective, and most commonly used approach in the trading industry today.
If you find your charts are getting out of control, then do yourself a favour, strip all unnecessary data off your chart template and start learning how to trade with the price action directly.
Even with a plain price chart, a trader can still get carried away and make a frustrating mess – and that’s exactly what happens most of the time. Marking support and resistance levels on your chart is one of the most basic, but vital skills you need to have to succeed with any Forex trading strategy.
Even fundamental traders who follow and trade the news, need to have a good understanding of how to draw Forex support and resistance levels to "complete" their trading analysis. Surprisingly, many traders – new and seasoned alike, continuously screw up their support and resistance line plotting and ‘poop in their own nest’ by going crazy with the way they go about marking levels on their chart.
Don’t Overcomplicate Support & Resistance
When you’re mapping out ranging markets, just stick with marking the upper and lower containment lines. They don’t have to be an ‘exact match’, where all the wicks or bodies like up perfectly – that’s very rarely going to happen. Just mark out the general area where price is turning.
In the example above, I am using the current GBPUSD daily chart which is currently stuck in range-bound conditions. All you should really be focused on is the main turning points here, where price is going to reverse and create a decent price move that you can capitalize on. Trading in the middle of the range is risky, price can get very erratic, unpredictable and volatile – it’s like a high-churn zone that can burn plenty money. But traders still try and do it, don’t be one of them. The most optimal point to catch a range trade is at the boundaries - so you mark them and only them. It’s as simple as that, if you don’t see a buy or sell signal at these main turning points, then wait until you do see one.
Sometimes doing nothing is the most profitable play you can make – and one of the hardest decisions to make, and see through.
Ranging markets are simple to work with, two levels that’s all you need. Moving markets, however, are a little different. I work with swing levels in a trending environment.
You see, even when you get these beautiful trends on the daily chart that seem to go forever and are an obvious buy or sell, many traders are still losing money despite how obvious things are. I truly believe the main problem comes down to timing. Losing traders are not entering the trends at the correct time, and getting screwed over by the corrections in the trend. Marking simple support and resistance levels can save your trading account from these mistakes. During trends, I mark out and concentrate on the ‘swing points’ - where old resistance becomes new support, or old support becomes new resistance. Time and time again, trend swing points will terminate the countertrend moves - it’s here you will more often than not see the trend pick up, and move into new highs or lows again.
Start looking out for and mark these swing levels – monitor them for buy or sell signals that align with the trend.
Check out the chart below…
This is text-book swing trading, which is taking advantage of countertrend retracements during a trending market. Notice how old resistance started to be respected as new support – this creates a swing level in the trend. It is generally the most optimal point to enter into a trending environment to get you maximum return on investment. It’s these swing levels that you should watch for buy or sell signals.
In this case we have some bullish rejection candles that communicated to the trader that lower prices were denied by the market at the swing level. This is a perfect ‘trend trade’ setup, it is a high probability situation that tells the Forex trader higher prices are very likely to develop…
Just remember, with a trending market you only really need to be concerned with swing levels.
Above is an example of how swing levels will work in a bearish environment.
Remember what I said before – levels won’t always line up ‘picture perfect’ - you just need to mark the general area where you anticipate will act as a main turning point on your chart. Don’t forget to mark major weekly turning points also, as they can stop strong trends in their tracks and kick off major reversals. Same deal, go the weekly chart and mark out any obvious strong reversal points.
Hopefully, I am starting to demonstrate to you the power of ‘simple trading’. There was no need for any complicated indicators here, or other over the top charting tools. It’s just working with a plain price chart, and being very minimalistic with marking support and resistance levels. Once you simplify the way you mark your levels, your technical analysis will become much clearer, less frustrating, and you will start to learn how to anticipate future price movements from a plain price chart.
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