What are Day Trading Support Levels and how do I find them?
To start, let me explain a little bit about what day trading support levels are. Due to a focused cluster of demand, certain price levels stand out because a current downtrend stops for a moment before going through.
For example, say you’re day trading forex and you have a sell trade active. You know there’s a steady downtrend occurring, and you’re simply waiting for your trade to clear before placing another.
All of a sudden, the market downtrend pauses. You assume it’s nothing, but as you go forward you realize the market is having a hard time breaking through that specific price level. Chances are that invisible forcefield is a support level.
How do day traders create strategies around support levels?
Support levels are a common addition to many trading strategies. Most traders treat support levels, along with resistance levels, as if the market will never break through.
By calculating the correct support levels, day traders are able to see into the future of the market. In fact, many traders base their entire trade on simply setting up to take profit prior to reaching specific support levels.
Furthermore, if a day trader knows a support level is located at a certain point, they can take profit on their sell trade and immediately place another trade in the opposite direction.
What is the main takeaway I’ll need while day trading support levels?
In conclusion, understanding support and resistance levels is absolutely necessary if you wish to trade using analytical tools. This is especially true for those who often find themselves in short-term investments, such as day traders.
If you’d like to learn more about how support levels work and how you can implement them in your own personal day trading strategy, contact us using the form below!