Beat The Stock Market
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Last Updated: May 11, 2022
By Rayner Teo
In this simple experiment, I will show you how support & resistance may simply be random lines on your chart.
Feel free to try out this little experiment yourself. As always, comments are welcomed and encouraged. Cheers!
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Thanks Rayner for your experiment.
This idea leads me to think of the problems some Price action traders using custom horizontal support/resistant lines that lines they draw are not significant enough which make losing trades.
Can’t agree more with you about only large TF support/resistant lines are significant.
Hey Phum!
You’re most welcome. I can’t comment much on how price action traders draw their SR, but to be profitable in trading is much more than simply SR. There’s risk management, position sizing, exits all to take into consideration as well.
Rayner
Hi Rayner, I would agree with you. We should not draw too many lines and not go back too far into the past. These lines should jump at you as very obvious especially in relation to current market price.
Hey Freddy,
Yes I agree with that. No point having too many lines as it clutters our key thing, price.
Cheers!
Rayner
Hi Rayner
was just reading your book and followed the link where you are drawing random trendlines, showing how they can act like support resistance. I guess these random trendlines work well on short term timelines like 5 min, 15min, 1h. But if you draw them on monthly or weekly, I guess you dont get so many hits, or what you think? Do you think if weekly/monthly SR lines are acting as important places if you trading on daily charts?
Hi Janek,
I believe SR levels on the weekly and monthly has more significance, reason being because the whole world watches them.
But then again, if i were to do the experiment on the weekly and monthly, i believe the results will be similar as well. In that they appear to be random.
You can try it out yourself and let me know what you think 😀
Rayner
An Very interesting experiment 🙂
Thanks for your interesting posts.
Shlomi
You’re welcome Shlomi. Glad to see you’re enjoying the posts 🙂
Rayner
If you take major monthly swings and use ICT order blocks with wicks and bodies and use the major swings you will see very good support and resistance on daily, 4hr and 1hr charts. Has worked for me for years. I go back 20 years on my charts the key is the monthly swings and change of major trends.
Hey Richard,
Glad to know its working out for you.
I hope to hear more from you in the near future.
Rayner