What is the support/resistance strategy?
The support/resistance is a short-term strategy that can help you utilize the levels of support and resistance to your great merit. How is this particular possible? It’s rather simple, really. When the price tests the actual support/resistance, it can go in and the opposite direction. This is where by you enter the actual trade – following the price features tested the levels. Of course, this particular doesn’t guarantee anything, but it leaves you using a nice chance connected with winning.
60-second binary options tend to be fast-paced trades so you should be quick about it but not let yourself fall in a pattern of just waiting and looking at the charts as you might miss as soon as and enter the trade in a very wrong time, when the price is just about to reverse directions again. You need to be really quick so as to utilize this strategy in order to improve your chances of winning. Speed isn’t everything, though. It’s also crucial that you study the chart and establish previous patterns prior to enter a trade. The more information you have, the more likely you can be successful.
What do you need to realize to make this strategy work?
The required skill set here is pretty in the same as the one required through the breakout strategy. You need to find out at least basic technical research. You will have to examine charts, so you need to know the type of chart your broker is using. The most popular today are the candlestick and bar charts and they are the ones you should utilize since they show you lots of information and ensure it is easy to establish a support and resistance level. Of course, you also need to determine what support and resistance are and how you can establish them.
When the price can’t go below a certain level, we call that a support level. In order to establish support, the price has to consistently be unable to breach that level. In the case of support, it’s the same, but the price can’t above a certain value. Once more, this phenomenon has to be observed several times in order to establish it.
The best thing about this strategy is that it gives you a great chance of success if you’re quick enough. Usually when the price tests the level of support/resistance (which means reaching it without breaking it), it goes in the opposite direction, which is when you should enter the trade. You need to be quick, though. Enter too early and you may hit it right when it tests the level, which means that it will be at its highest/lowest and you will lose (unless you’ve made the right call, which is not likely if you screwed up your timing). Enter too late and you may hit the reversal when the price had changed direction, gone up or down, and now is reversing it again.
It’s important to note that levels of support/resistance are established when there are relatively small price movements. The price will move between the support/resistance levels and these movements can be quite fast, albeit insignificant in the long scheme (because there is little trading of the underlying asset, the price is stable in the long run which means that these fluctuations aren’t relevant for long-term investors).
What this means is that you need to be precise and make quick decisions, as well as enter trades at the right time. The safest time to enter is right after the support/resistance has been tested. This is when the price is sure to be in the opposite direction at least for a little while. If it’s tested the support, then place a call trade because it’s likely to go up. If it’s tested the resistance, place a put because it’s likely to go down.
In order to minimize the risks, you shouldn’t trade more than 5% of your capital. All in all, there is no such thing as a “sure strategy” so you need to always be prepared for the possibility that you will lose.
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