#5: Trading Support And Resistance Levels In Larger time Frames Offer The Best Risk:Reward Outcomes
Again, this is so obvious.
Go open up your chart and look at a past support or resistance level and imagine what would have happened if you bought at the support level and held your trade for 15 or more days?
Did price move 700 pips? 1000 pips?
Let’s look at a “what if” scenario.
Trader Joe Blow saw this major support level/zone and took a buy trade.
His stop loss was only 40 pips.
His take profit target was the obvious resistance level above.
About 2 months later, his profit target was hit, giving him 400 pips profit.
His risk:reward=1:10. Awesome trade outcome, in my opinion.
Now, this example above is for trading support and resistance on larger timeframes but even in in smaller timeframes, the risk:reward of trading support and resistance levels there are pretty much going to be the same.