AtoZ Markets – In forex trading, there are tools called resistance and support. These tools can be beneficial for traders when they are applied and executed correctly. At first, they may seem pretty simple; they tend to be more complex than how they appear to be. This article will let us understand how to use support and resistance in trading further. To make things a lot easier to understand, let us divide the way we trade them into two types: the bounce and the break.

The first method: the bounce

The bounce method means trading the support and resistance level after the bounce, hence its name, the bounce method. Some traders set their orders straight to the support and resistance levels. All they do is wait until their trade materializes. This practice is a common mistake of traders when they trade support and resistance levels. Sure, it may work sometimes, but we cannot get lucky all the time, right? A trader should not always expect the support and resistance levels to hold when the price is not even there yet. The traders who do this set their entry directly on the line, thinking that they ensured the best possible price.

A trader who uses the bounce method hopes for a confirmation that a support or resistance level holds. To explain more, if you are buying, then you do not just simply buy straight away. You can wait for it to bounce off support before your entrance. On the other hand, if you want to sell, you will wait for it to bounce off resistance before your entry. If this is your action, you can avoid those swift price moves and break through the support and resistance levels.

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