A few days ago I brought here a good method for beginners to protect themselves from the market's decline through staggered purchases divided into 4 following the market's decline. I read your comments and in response to requests I am here to bring a practical example with an operation in which I am in the currency $ACA .
Before trying to interpret the graph I have placed, pay close attention to the next two paragraphs as I will emphasize points of extreme importance so that you can see more than just lines drawn "randomly" and, in addition, I will bring the meaning of each line within the operation.
If you already understand what support and resistance are, feel free to go straight to the next paragraph. Now, if you are not yet familiar with support and resistance, here is a quick explanation about it. What we call support is nothing more than a lower value on the chart that the currency reaches several times but does not surpass; that is, it serves as a support value, which whenever the currency reaches it, it "supports" the price so that it does not fall. The more times the support is reached and reversed, the stronger it is. Similarly, resistance is a higher value on the chart that the currency reaches but "resists" breaking through; that is, whenever it is reached, the currency retreats and does not break through. Remember that we do not work with precision, sometimes the price may exceed the support and resistance traced at some points or, in the same way, fail to reach it by a few points, but never by a large margin.
Let's explain the meaning of each line on the chart. I made sure to color them to explain each one according to its color. The green line 🟢 is simply my target, which I always draw at a resistance since the price usually gets there and retreats and would be the ideal selling value. The blue lines 🔵 are each of the points at which I intend to buy if there is a large retreat (as evidenced in these days). The yellow line 🟡 is the average value that my portfolio will have after the four purchases made.
Let's now explain the method along with the operation: The method I brought involves dividing your capital into 4 whenever you operate. The 4 purchases should be made at 4 of the most evident supports that you find below the price at which the currency is. In this case, the supports that I identified are respectively at 1009, 970, 917 and 868 (all blue lines on the chart) all points that I strictly followed as a purchase. Also note that each of the green arrows below the candles show when I bought. After placing the supports, I draw one or two resistances that I identify (in this case I drew only one, highlighted at 1034) that I follow as an initial sale point (you will understand why initially). See that I made two sales at 1034, highlighted by the red arrows above the candles. Many times we don't even reach the second support for purchase and we are already able to make a profit at the resistance (this is actually the most common thing that happens).
Now you must be wondering, I have completed the four purchases, what should I do? Without a doubt, if the currency has reached the fourth support, we are in a period of strong decline. It may take days or weeks for it to reach our initial target. That is why we must identify the average value of our operation. In this case, 940. Then, identify the closest support for purchase above; 970 in this operation. Set this point as the target. Of course, you can wait and sell at 1009 or even 1034, but the higher you go, the greater the risk of not reaching it again so soon.
Remember that we do not work with precision, so leave a selling margin between 967 and 973. I often sell one or two points below to guarantee the operation.
If you have any questions, I am completely available. I know it is a lot to take in, but I tried to be as clear as possible. If you did not understand something, leave a comment and I will be happy to answer.
Great operations to all and let's play!