How to Trade on Support and Resistance by using Operator Mindset

How to Trade on Support and Resistance by using Operator Mindset

How to Trade on Support and Resistance by using Operator Mindset

Introduction:

How to Trade on Support and Resistance by using Operator Mindset: Support and resistance are important concepts in trading. Support is a level where the market trends to bounce and move higher, while resistance is a level where the market trends to drop and move lower. Understanding how operators think and trade at support and resistance levels can provide valuable knowledge for traders. In this article, we will discuss different types of support and resistance and how to trade using these levels.

Types of Support and Resistance:

There are four types of support and resistance levels that operator’s commonly use: Previous swing, Psychological levels, Previous day’s closing, and Day low. Let’s take a closer look at each of these levels.

Previous Swing Level’s- Operator Mindset

1. Previous Swing:

A previous swing level is formed when the market moves up and then bounces back down or moves down and then bounces back up. If the market returns to this level in the future, there is a high probability that it will continue in the same direction. Traders can enter a trade when the market breaks above or below the previous swing level.

2. Psychological Levels:

Psychological levels are specific price levels that end in 00 or 50. These levels act as strong support or resistance because many traders place their orders at these levels. For example, if the market is at 44000, the psychological levels would be 44500 and 45000. When the market breaks above or below these levels, it often leads to a strong move in that direction.

Previous Day’s Closing & Psychological Levels:

3. Previous Day’s Closing:

The previous day’s closing price is another important level that traders use. If the market opens above or below the previous day’s closing price and stays there, it can indicate a continuation of the trend. Traders can enter a trade when the market breaks above or below the previous day’s closing price.

4. Day Low:

The day low is the lowest point the market reaches during a trading day. If the market returns to this level in the future, there is a high chance that it will bounce back up. Traders can enter a trade when the market breaks above the daily low.

Read More: Understanding the Smart Money Concept in trading

Operator Mindset Trading Strategies:

Now that we have discussed the different types of support and resistance, let’s explore two trading strategies that can be used to trade these levels.

Buying at Support & Selling at Resistance

Strategy 1- Buying at Support:

When the market reaches a support level and a green candle is formed, it indicates that the market may move higher. Traders can enter a long trade when the market breaks above the support level and a green candle is formed. The stop loss can be placed 15-20 points below the entry level, and the target can be set at 1:2 risk-reward ratio or around 50-60 points.

Strategy 2- Selling at Resistance:

When the market reaches a resistance level and a red candle is formed, it suggests that the market may move lower. Traders can enter a short trade when the market breaks below the resistance level and a red candle is formed. The stop loss can be placed 15-20 points above the entry level, and the target can be set at 1:2 risk-reward ratio or around 50-60 points.

Read More: Option Chain- basic to advanced beginner’s guide

Conclusion:

Support and resistance are important levels in trading that can provide valuable insights into market movements. By understanding how operators think and trade at these levels, traders can increase their chances of making profitable trades. The strategies mentioned in this article, along with proper risk management, can help traders take advantage of support and resistance levels in the market.

People Also Ask- FAQ:

1. What is the psychology behind support and resistance?

Ans: Support occurs where a downtrend is expected to pause, due to a concentration of demand. Resistance occurs where an uptrend is expected to pause temporarily, due to a concentration of supply.

2. Which indicator is best for support and resistance?

Ans: “Fibonacci indicator” this indicator best for support and resistance.

3. What is the best way to trade support and resistance?

Ans: Buy at the Support level & sell when prices are at the resistance level

4. What is the psychology behind support?

Ans: Support occurs where a downtrend is expected to pause, due to a concentration of demand.

5. What is the psychology behind resistance?

Ans: Resistance occurs where an uptrend is expected to pause temporarily, due to a concentration of supply.

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