Support and Resistance Based Off Indicators V2
Theory Behind It"
There have been hundreds of trading methods and theories that have been proposed by the trading community, each with a unique perspective on trading. One of the most popular theories is known as the Dow theory which was one of the first theories to theorise the concept known today as trends. Now the majority of today's trading strategies are based off the single concept known as "trends."
These concepts and theories have shaped many traders strategies and trading plans to this day. And with a new era of easy access trading, in which nearly anyone with a wifi connection, and computer, or smartphone an trade hundreds of markets brings a light to traders known as retail traders. Which according to Credit Suisse, have accounted for a third of all stock market activity in the United States at points this year. This means that Retail traders are now a community of “market players” that are knowledgeable investors who seek to learn and incorporate their own trading strategies into the market.
This newfound significance of retail traders in the market prompted me to consider a new concept, which I've dubbed the "retail theory." This theory combines the theory that intraday traders move market prices, and if we can figure out what the majority of these retail traders are doing, we can trade based on other traders rather than the actual financial instrument. This notion may be difficult to grasp, so let's break it down.
Let's say there are ten people who can pick any color from a bag. Out of the ten people, Yellow is the favorite colour of two people, blue is the favourite colour of one person, and red is the favourite colour of seven people. Let's pretend we had to bet on which colour the majority of those ten people would choose. While it's evident that we'd all bet on red to win because it's the most popular color, but how does this apply to the markets?
While traders, as we all know, use a variety of indicators to determine where to buy and sell. Some of the most popular indicators that majority of traders use are the moving averages, exponential moving averages, bollinger bands, fib levels, pivot points, vwap, etc. Now tt's impossible to say which indicators are preferred by the majority of traders, but if the majority of indicators align at a certain level, we may infer that the majority of traders will be looking to buy or sell at that level. This is where the indicators-based support and resistance indicator (I know, bad name, but I'm not that creative) comes into play. We can get a good indication of where the bulk of traders will be looking to add or sell by looking at the top indicators on the market and seeing if they are within range of each other. When this is combined with the basic theory of trends, we are able to gain a competitive advantage in the market that few traders have, known as an edge.
If you have any questions based on this theory let me know, but as I said before this theory is based on the concept that we are trading based off majority of what other traders think or are trading off of, not what we think
How It Works:
This indicator checks to see if other types of support and resistance indicators, such as the EMA, VWAP, FIb levels, and so on, are within range of one another. Simply put, when two indicators are within range of each other, a box will appear indicating where they are matching. The color of the box is determined by the number of indicators that line up within the same range, which can be adjusted with user input.
The user also has free range to change all input settings
How To Use:
This is a form of resistance and support indicator that should be used in conjunction with other technical tools. Each box color shows the number of indicators that are aligned with one another. A yellow box, for example, indicates that six or more indicators are within range of each other, but a white box indicates that only two indicators are within range of each other.
These boxes that appear should just be used as a type of support and resistance, but again you can see the strength of the support and resistance by the color.
Notes:
I came out with the concept version about a month ago, and since then it has been nothing but prefect for me. I found with 5 or more indicators line up within each other, then that area tends to be a key "dip buy" area for me. Also acts as a extremely powerful support or resistance if the indicator lines up with trendlines, or horizontal daily supports
There have been hundreds of trading methods and theories that have been proposed by the trading community, each with a unique perspective on trading. One of the most popular theories is known as the Dow theory which was one of the first theories to theorise the concept known today as trends. Now the majority of today's trading strategies are based off the single concept known as "trends."
These concepts and theories have shaped many traders strategies and trading plans to this day. And with a new era of easy access trading, in which nearly anyone with a wifi connection, and computer, or smartphone an trade hundreds of markets brings a light to traders known as retail traders. Which according to Credit Suisse, have accounted for a third of all stock market activity in the United States at points this year. This means that Retail traders are now a community of “market players” that are knowledgeable investors who seek to learn and incorporate their own trading strategies into the market.
This newfound significance of retail traders in the market prompted me to consider a new concept, which I've dubbed the "retail theory." This theory combines the theory that intraday traders move market prices, and if we can figure out what the majority of these retail traders are doing, we can trade based on other traders rather than the actual financial instrument. This notion may be difficult to grasp, so let's break it down.
Let's say there are ten people who can pick any color from a bag. Out of the ten people, Yellow is the favorite colour of two people, blue is the favourite colour of one person, and red is the favourite colour of seven people. Let's pretend we had to bet on which colour the majority of those ten people would choose. While it's evident that we'd all bet on red to win because it's the most popular color, but how does this apply to the markets?
While traders, as we all know, use a variety of indicators to determine where to buy and sell. Some of the most popular indicators that majority of traders use are the moving averages, exponential moving averages, bollinger bands, fib levels, pivot points, vwap, etc. Now tt's impossible to say which indicators are preferred by the majority of traders, but if the majority of indicators align at a certain level, we may infer that the majority of traders will be looking to buy or sell at that level. This is where the indicators-based support and resistance indicator (I know, bad name, but I'm not that creative) comes into play. We can get a good indication of where the bulk of traders will be looking to add or sell by looking at the top indicators on the market and seeing if they are within range of each other. When this is combined with the basic theory of trends, we are able to gain a competitive advantage in the market that few traders have, known as an edge.
If you have any questions based on this theory let me know, but as I said before this theory is based on the concept that we are trading based off majority of what other traders think or are trading off of, not what we think
How It Works:
This indicator checks to see if other types of support and resistance indicators, such as the EMA, VWAP, FIb levels, and so on, are within range of one another. Simply put, when two indicators are within range of each other, a box will appear indicating where they are matching. The color of the box is determined by the number of indicators that line up within the same range, which can be adjusted with user input.
The user also has free range to change all input settings
How To Use:
This is a form of resistance and support indicator that should be used in conjunction with other technical tools. Each box color shows the number of indicators that are aligned with one another. A yellow box, for example, indicates that six or more indicators are within range of each other, but a white box indicates that only two indicators are within range of each other.
These boxes that appear should just be used as a type of support and resistance, but again you can see the strength of the support and resistance by the color.
Notes:
I came out with the concept version about a month ago, and since then it has been nothing but prefect for me. I found with 5 or more indicators line up within each other, then that area tends to be a key "dip buy" area for me. Also acts as a extremely powerful support or resistance if the indicator lines up with trendlines, or horizontal daily supports