In an effort to expand on the concept of support and resistance, in reference to an earlier article, let’s take a look at the EUR/USD.

Here’s the daily chart that I’m currently following. In it you see the yellow line at the bottom, marking off a key support level that I expected prices to test.

The closest it got was right at the end of May, before prices moved back up.

Prices can still come back to test this level, at which point we’ll see how this support level holds up.

Now how did I come to this support level?

It’ll be clear by taking a look from a further perspective…

If you trace along the yellow line, you can see, at the beginning of December that level acted as a very strong resistance point, halting the upswing started in mid-October.

That resistance price level was then tested again in mid-March, and created a degree of consolidation before breaking through to the highs seen in early May.

Quite simply by looking for areas where price was supported or resisted in the past I use that as my guide.

The longer that a support/resistance level has held, the more weight I give to it.

After defining them, I then watch how the price acts around them. This is where you pick up clues on what the market wants to do.

To finish, you’ll also note that the high formed in early May now becomes a key resistance point, which may form the upper level to a trading range, and if broken will potentially allow price to move up unrestricted until it meets its next resistance point.

I hope this helps to explain a bit more how I look for key support and resistance levels.

Continued Success!

Ray

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Yesterday, someone asked me why I use so many poker comparisons.

So today I’ll explain… 2 reasons actually:

The first is I’ve only recently started following the growing popularity in poker.

Not being a gambling man myself, I used to shy away from the game. (I never saw trading as gambling, so that didn’t count in my mind.)

But after closer inspection I started to understand that unlike most casino games, poker wasn’t based on sheer luck… and instead was very closely related to trading.

You see, with the popular game of ‘No Limit Texas Hold Em’, after getting dealt a pair of cards you decide whether you will bet or not.

That’s essentially the ‘trade setup’. After the market gives you something, you decide whether you will enter into a trade.

What transpires with the additonal cards is equivalent to how the market unfolds after your entry. You decide whether to see what happens (check), add to your positions (bet more) or close out the trade (fold).

What I really found of great interest is how the emotional discipline of trading carries over to poker almost seemlessly. And it’s only now that I realize why so many traders reference gambling analogies… and why many of the traders I know are avid poker players.

The second reason I’m writing more about poker, is because it gives me a legitimate excuse reason to watch hours of poker

You see, when I’m plopped down in front of the TV watching hour after hour of poker tournaments and my wife asks me, “Are you busy?”, I can respond, “Yes, I’m busy… can’t you see I’m working?!”

Continued Success!

Ray

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We’ve all heard that “The trend is our friend”, yet anyone who’s tried to trend trade has invariably said to themselves… “How low can this market go? This MUST be the bottom!”.

Don’t fall into this trap!

Let the market tell you what to do. In this following example, the persistant downtrend in the USD/CAD forex pair continues as this trend continued even further downwards, breaking into new territory.

Even with a poor entry, in just over a month this simple trend trade has racked up over 490 pips.

This is a very interesting area to be in, as support levels back to 1991 have been cleared, allowing more unrestricted movement to occur [shown below].

In an earlier article I was asked to point out how I define key support and resistance levels.

One simple way is to see where price has acted as support and resistance in the past. The longer a price level holds, with respect to time and breakthrough attempts, the more important I deem it [as shown above].

And in this example, as the price levels gives way, there is a degree of unrestricted movement, as underlying support levels, in this case, just don’t exist.

We’ll see how the USD/CAD shapes up over the coming days and weeks.

Also take a look at the EUR/USD… this chart is looking quite promising as well.

Continued Success!
Ray

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Yesterday I saw the luckiest poker player I’ve ever seen.

It was a tournment featuring 3 professionals and 3 amateurs.

The final 2 remaining players happened to be a professional and an amateur.

What was jaw dropping was how well the professional was playing… making all the right decisions, doing all the right things… while the amateur seemed to just be flying by the seat of his pants… yet miraculously managed to luck out exactly when he needed it.

To make a long story short, the amateur lucked out and strung together an incredible streak to win the $1.2 million prize, seemingly with sheer luck.

What does this have to do with trading?

3 things…

1. Sometimes you can do all the right things and lose money.
2. Sometimes you do all the wrong things and make money.
3. Dumb luck may put some money in your pocket every now and the, but don’t depend on it as a winning long term strategy.

Continued Success!

Ray

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Please keep the suggestions coming! You can post them as a comment here.

I’ve been personally reviewing all the suggestions. About half of the programs are already in my library, and the other half I’ll be taking a look into.

What I found interesting and wanted to talk about today was that most of the answers fell into 2 groups…

1. Nothing worked.
2. This course is really good / This course provided insights that I built on.

The reason I found this interesting was that there ARE just as many ways to trade as there are traders.

And even in the attempt to design a “one size fits all” approach to trading, this is extremely tough to do, because none of us are the same size.

What do I mean by that?

We all have a unique set of thoughts, experiences and beliefs. And the hardest part in moving from group 1 to group 2 is getting past the yourself to apply the course as instructed.

I’ve had the same challenges, as often times I’ve struggled to do what is instructed because at some level I didn’t believe it was going to work. This creates a self-fulfilling prophecy, as anything you don’t do won’t work.

So either you adjust yourself and your beliefs to do what is instructed or you adjust the system in a way that makes it workable for you.

For example in my own experience I “know” what it’s like to average down, and will never averaged down again, based on the emotional (and financial) lesson I’ve learned…

Now if I come across a system that teaches averaging down, I’m left with either re-examining what I believe to be true, so that I can accept averaging down or I have to take what I can learn from the system and incorporate it into something that works for me.

Being able do either of these will help insure that you continually maximize the material you come across. I believe that this is truly the missing link preventing many people from moving from “how-to” to “doing”.

Continued Success!

Ray

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