In this episode of Truth About FX, Walter dives into price action and drawing support and resistant lines correctly. He talks about scalping. And did you know that there’s a simple way of identifying support and resistant zones?

Download (Duration: 07:34 / 8.7 MB)

In This Episode:

00:29 – losing more

02:03 – focus

03:12 – simplest way

04:06 – special case

Tweetables:

Identify your trading style [Click To Tweet].

Focus on support and resistance  [Click To Tweet].

Trade double bottoms [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. Somebody wrote in and asked. They want to learn how to master price action but they’re losing more than they gain right now and it seems like they can’t time the entries and they can’t draw support and resistance lines correctly. What should they do?

Walter: There’s a couple of things here that are… What’s going on here I suppose is this trader has a couple of ideas that may or may not be true. As we all do, we walk around with these ideas that may or may not be true.

He believes that price action is the way to go. That’s good because that means that this trader has identified how he wants to trade. Awesome! I love it. That’s great. However, this trader has loses that exceed the profits.

That means one of two things. Either the loses and the profits are about the same size and you have more losses than winners. Or, more likely — which is most often the case — you have more winners than losers but your losers are way, way, way too big. That’s because our natural inclination — and I’m no different than anyone else listening to this — is to try and win more often than to lose.

When you do that, when you try to win more often than you lose, the easiest way to do that is to take really tiny, small winners and then take these big, fat losers. That’s the easiest way. It’s called “scalping”.

That’s the easiest way to ponder to your desires as a human. But, here’s the thing, you don’t have to necessarily time the entries to get into these things. What I would do is focus on the support and resistance.

You believe in price action, you believe in support and resistance. What if you just do this, what if you just look at the D1 charts — and I’ll post a video on the show notes for you — but what if you’ll just look at the W1 charts as a way of identifying your support and resistance zones.     

You have the W1 charts, you go to the line chart and you identify your weekly support and resistance zones, and you just trade the D1 chart off of that. What if you also didn’t have to time your entries but instead let’s say for example, the markets been going down, it finds double bottom on support.

A really strong weekly support level so you trade the D1 chart there, after the second bounce,