RE: Check out D-Tube and lets mark up some charts
Hi Luc,
I've been thinking about your trading style and as I was getting impatient many times while practicing it because bases would just not break and I could only get in 1 or 2 trades a week or so after putting in so many hours and then I came up with a trading idea.
What if every time there's a solid base (support level), I buy and if the price goes up I set a certain profit margin, I don't get to greedy (5-10%), to guarantee a profit. If the base gets broken I use your trading style like you thought us and start buying in the safe zone. Once the price goes back to it's normal level I can break even on the amount I bought at the base (support level) and I can still profit on the money I bought in the safe zone the same way I would using only your style. But this way I don't have to miss out on low risk trades since I can most likely break-even and I don't have to wait so long for trades to happen.
The downside I see of this of course is if the base breaks but there's only a mild drop into a downtrend and the price doesn't bounce back. However, the chances of a solid support level being broken and it not being a panic seems very small to me. Thoughts?
My method of trading is by no means the only method that would be successful. There are hundreds of ways for you to take successful trades. However you have to be able to calculate your odds. Thats the key, any type method you want to develop, you need to be able to have a clear set up that you can backtest and know what your odds are.. Also, you need to know the story of the trade, in my method, (1) we wait for a base to form and qualify that base by the amount of buying or buying reaction that occured the last time that price was hit.. then we know there are buyers that like that pricepoint.. so thats our base.. we have the first piece of information in our story.. (2) Then by looking at a 1-2 month view of the chart, we can see if there has been alot of interest in this chart, if there are buyers that come in on every dip, this gives us context and odds.. (3) then when a panic happens below the base, we know why there was a panic, because all those buyers where surprised, and started to stop loss their positions.. now we know the whole story and really have the odds in our favor... Unfortunatly Patience is one of the most important skills you need to develop as a trader.
it can work but size is a problem
u will be losing profit from positions if u go in big at support
u will be losing profit from support trade if u go small at support
the base return is not 100% to exact level
there are many small cracks which dont collapse the base