Support and Resistance: Where to Place Your Stops to beat the Whales đł
Support and resistance levels are key concepts in crypto trading. But they arenât just lines on a chartâtheyâre tools that can protect your capital and guide your trades. Understanding these levels and how to use them effectively can make a huge difference in your results.
Support is the level where price tends to stop falling and bounces back up. Itâs like a trampoline that prevents further downward movement. If the price breaks below this level, it signals selling pressure is dominating, and the price could continue to drop.
Resistance is where price tends to stop rising. Itâs like a ceiling that the price canât break through easily. If the price pushes past resistance, it signals strong buying pressure, and the market may continue to rise.
But hereâs where it gets interesting. Simply placing stop-loss orders at support and resistance isnât enough. To avoid getting caught in liquidity grabs or sharp market moves, I take a slightly unconventional approach.
⢠For long positions: I place my stop well below support, with a buffer to protect against sudden dips that might trigger a stop before the price bounces back.
⢠For short positions: I place my stop far above resistance, with enough buffer to avoid being caught in sudden upward spikes or liquidations.
The key is adding that buffer. Without it, youâre more likely to be stopped out by market manipulation or unexpected volatility. This extra cushion gives your position room to breathe, allowing you to avoid unnecessary losses and stay in the game.
In crypto trading, the market can be unpredictable. So, when I set stop-losses, I make sure to leave enough space between my entry points and the support/resistance levels to account for sudden moves.
If you want to see how I apply these strategies, feel free to check out my lead copy trading account. Click here to copy and đđ°. Cheers.