Support & resistance are very important tools for the day traders. I discovered as a day trader supply and demand are key causes of markets movement. When there is a huge demand for a stock, the stock will rally and if a significant number of share holders want to sell a particular stock, there will be sharp fall. But when the price has really difficult time to move upwards or downwards, we called it support or resistance. In support & resistance level supply & demand are almost equal.
How day traders can use support & resistance in day trading?
1.In an uptrend, trader should buy at or above support level, never below support.
2.In a down trend, trader should sell at or below resistance level, never above resistance.
3.If traders already in an up trend should be prepared to sell at resistance, price can fall sharply at resistance.
4 .If traders already in short position should be ready to take profit when price approach support level.
2 comments:
Nice blog. What does PRD stands for?
TY,CDT for ur kind visit.
PRD stands for positive range divergence.
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