STRATEGY 2: KEY LEVEL

STRATEGY 2: KEY LEVEL

“History doesn’t repeat itself, but it does rhyme.” -Mark Twain

Key Levels define the patterned rhyming of previous price action and can be used to define parameters for future trades. Price action will often bounce off or breaks through Key Levels and this is why traders use them to identify Entry, Stop Loss & Profit Targets and avoid trading in “No Mans land” where price action has no real significance.

Resistance and Support

A diagram explaining the concept of support and resistance when looking to define parameters of future trades

How to draw key levels

Diagram explaining key levels

Drill down to lower time frames (in this case Daily) to identify potential Entry points.

A diagram explaining how to identify key entry points visually

TIPS

  • Key Level Parameters are an excellent method for cancelling out “market noise”
  • This exercise is designed to teach you how to read the market for yourself, for the best trades cross-reference your results with a pivot table and current Broker Commentary
  • Stop Losses should be placed behind Key Levels, Profit Targets should be placed on Key Levels

Leave a Reply