Unless you are new to trading, chances are you have heard it many times. It really is very important too, so if you don’t understand how to buy low and sell high, then this article will open your eyes and give you one of those “oh yeah” moments. My most consistent profits began to appear when I began to focus on this strategy as my number one entry method. Regardless of the strategy you are currently using, if you are consistently making money, you will likely find some way to enter the market long key low areas or enter the market short key high areas.
If you’re still with me and still don’t understand what I’m about to reveal to you, this is probably the most important article you’ll ever read when it comes to learning how to trade profitably. It doesn’t matter if you trade intraday, daily, weekly or even monthly charts, because prices react the same way on all charts.
I will challenge you to just watch what happens on your charts for a few days or weeks depending on the time frame you are trading. See for yourself if what I am about to talk about is not easily recognizable and negotiable. It’s relatively easy to see on almost any chart once you know and understand what to look for. You can even use weekly and monthly charts and trading options with this strategy if you wish.
First find your key support and resistance areas and draw lines there to help you see them easily. These areas will consist of double tops and double bottoms in many cases, but you may even see prices reverse in these areas several times and if so, you can already see what I mean when I say prices will change. they almost always bounce off these levels. You’ll also find that prices will often reverse trend in these same places. Once you locate these important areas, simply wait for prices to return to the areas where you are looking to buy or sell.
When you find a strong area of support or resistance, look at it as a great opportunity to enter the market with a chance to buy low or sell high, because that is what you will do. As well as following one of the most important rules in trading, you will also find that you can enter with a relatively small safety stop, so there is another benefit to entering these places. I’ve gotten really good at this so I often buy these areas blind without thinking about what prices will do when they get there but if you can’t do this just wait on a trend bar in the direction of your entry e enter just above that bar if you are long or just below it if you are short once the bar has completed and closed.
Once you get in, your goal is to try to get a piece of the trade, because while prices will likely waver when they hit these important prices, they may not always move in the desired direction as we would like. Every market is different, so take a close look at the market you are trading and study past support and resistance areas until you have an idea of how much you can safely scalp without staying in the trade too long. If prices normally bounce a dollar on a stock you like, then don’t go for all the money. Try to get half or three quarters of the bounce to keep your win percentages high on the scalp portion of the trade. I like to walk out with a safe scalp in the middle of my trade, and then move my stop on the rest of my contracts or stocks to break even and hold my ground in hopes of making a bigger move. Using this strategy, it doesn’t matter what happens after the scalp is closed, because the operation is risk-free at that point. The worst that can happen is that prices pull back and knock your break-even point out for the rest of the trade. However, you will have made money on the scalp portion of your trade.
Many traders hate seeing trading ranges, because they feel like they can’t make money during these patterns due to the fact that the market doesn’t move or trend. If you learn to understand that buying and selling strong support and resistance is the easiest way to make money, you will start to enjoy and look forward to these trading ranges like I did. I often buy the lows and sell the highs of trading ranges multiple times knowing that the odds of even a small bounce at either extreme are extremely high. If and when I am wrong, my stop is small and I lose very little, so I find that trading this way gives me the best of both worlds, which is a very high profit percentage and very small safety stops when I lose. mistaken.
If you are not already using this strategy to trade some of the choppy markets, particularly when it comes to ES, YM and NQ futures, I highly recommend getting some charts and checking them out for yourself. You will be glad you did and it will probably improve your trading results as well. Most importantly, you will be forced to buy low and sell high, which is where real money is made when trading the markets!