Trading With the Levels

Every morning, we send out 8-10 levels as Supports and Resistance Levels for Nifty. Similarly, other analysts also give out their own levels. These number differ from analyst to analyst and from trader to trader. Then, you may ask, What's the use of such levels? Do they really work? Read on for Answers.

As given in my earlier posts too, there is no point in trying to predict the market. The supports and resistances are defined by markets. They are not defined by any formula or trader. Then, what is the use of having such levels? The answer is - Trade Plan. These levels help a trader to plan his trading for the day/ week/ month etc. Markets do move on levels. The volumes will be more at certain points, while between these points, you will find Low volume areas. The problem is, to predict these important Support and Resistance level consistently is impossible. However, we can find our important resistance/ support "Zones" for the Nifty, where high volume trades have taken place in the recent past. If you see our posts in Nifty View on www.niftypower.com, you will see that we always provide Resistance and Supports in multiples of "5", not as exact point (for e.g. 5435 instead of 5437). The reason is that these levels are not to be taken as Points, instead, these are the Zones where a trader has to watch the market action and decide on a trade. How to make use of these levels - Read On.

Once you have the levels for the next day with you, you plan your trade around these levels. Then as the market starts to trade near these levels, you execute your trade as per your trade plan and intraday positioning of other indicators that you use for taking a Buy/ Sell decision. You also know where to place your stoploss. It would generally be a few points below/ above the next level.

Here, the most important thing is that you take all the Buy/ Sell decisions at your pre-planned levels only. What this ensures is, you wait patiently for market to come to your level and then execute as per the plan made by you. All the thinking for the trade had been done on the previous day. In Live Market, you are executing your plans. This ensures that your Emotions stay out of your trading. That, is the first and most important Step for achieving Trading Success!

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