Wednesday, September 17, 2008

The Line of Least Resistance

The Price always move through the line of least Resistance.The traders task is to identify and determine the speculative line of least resistance at the moment of trading and trade in the direction of least resistance.A trader should wait for this moment when the line defines itself and that is the traders signal to get in.
In other words by crossing a support or resistance the line of least resistance is established.It will not be difficult to make money if a trader always stick to his speculative guns, that is waited for the line of least resistance to define itself and began buying only when the price said up or selling only when the price said down breaking key levels of support or resistance.
The major task of the trader at this point is to find out real break-outs.Most of the time the break-outs are false and there is a high possibility of traders being caught in false break-outs loosing both material and mental capital.

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