Support and Resistance Basics for E-Mini Trading, Part 2

I recently wrote an article on the subject of support and resistance (SAR) that was published and have received an unusually high number of enquiries on the subject. First of all, let me say unequivocally that the mother lode of trading proficiency lies in identifying SAR and understanding how to trade these lines. In my mind, there is nothing more to trading than understanding the structure and context in which the e-mini contract is trading; most important in understanding the structure of the market is to identify where real support and real resistance can be found. By real support and resistance, I am inferring that I have no use for floor pivots, Murray Math or any of the host of predictive SAR tools. I want real lines to form and then I know, for sure, exactly where real stopping points are located.

You can safely say that I am a reactive trader, not a predictive trader. I am also an e-mini scalper. I need to stress if you are going to be a reactive e-mini scalper it is absolutely essential to use real-time indicators because lagging indicators will, by definition, find you entering trades 8-10 ticks late. Entering e-mini scalp trades late is the recipe for disastrous trading and, in my opinion, is the leading cause of novice trading failure. It is important to point out that my theory about lagging indicators and novice traders failing is my opinion and is not a statistically confirmed statement.

Now let's talk a bit about indicators, which if you read some of the popular websites, especially one that recently changed its name, are the absolute answer to your trading needs. In my world the only useful purpose indicators provide is to help me filter out undesirable trades. This relegates indicators to a role of filtering out good trades and bad trades when you reach an area of where known support or resistance resides and even then they are not particularly helpful because real-time trading and lagging indicator seldom sync together in a coherent fashion.

Finally, in a zero-sum trading environment volume becomes your best friend. In futures trading there is a winner and loser on every single contract. So, in order for you to win someone has to lose. However, volume and order flow volume will usually tell you all you need to know as to whether a given market move has the strength to pierce our lines. Generally speaking, the higher the volume at SAR the more likely price is going to reverse and conversely, low volume usually indicates that most of traders are on one side of the contract and there is a high probability that the price will continue through our support and resistance lines. In short, if you can identify the price action stopping points on your trading points, you have a great chance for success.

Would you like to start earning 300% every week? So would I... yet you see this type of hype on many sites these days. I don't promise astronomical returns, but 25 years of Wall Street trading experience has helped churn out solid e-mini traders for 5 years. Come see me trade. Real trading doesn't lie. Click here for a free visit to my trading room and see for yourself.

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