Trading “Blind” is the norm for most traders. They (you?) see a set-up on their chart, maybe a line has crossed another, maybe there’s a lower close, whatever; then they take the trade.
That is nowhere near good enough to be successful in the long term. You need MORE!
You should be able to predict with 55% accuracy where the price “could” move to next. You then should use shorter term charts to focus in on the entry which should be low risk and have a pre-determined stop-loss and be highlighted by your indicators, patterns, and so on. You should then manage the trade according to predefined (and extensively tested) rules that will either get you to the price target from the longer term chart, or, get you out with as little loss as possible.
Here’s a way……
I believe that the market has 3 phases. Conjested – RangeBound – and Trending. For me a trend begins when price moves outside of a previous RangeBound or Conjested area. It may move 100 pips in a nice trend, or 100 pips in just a few minutes, or it can, of course, move just a few pips and do the whole thing over. Here’s a chart to explain.
BTW I do of course also use moving averages but only AFTER a b
Support and Resistance basically equals Supply and Demand. If previously a market has fallen from a particular price level then when it re-visits that price there could well be some “supply” (resistance) remaining. This is again cause price to either fall again, or at least to stall any upwards progress and require the market to build up some “inbalance” or pressure, before being able to continue upwards.
The lines are therefore drawn at levels where previous tops and bottoms occurred. Note that tops are usually Support on the way back down, but also of course Resistance on the way Up.
“Magic” Lines were developed by Dimitri and are available here http://www.magiclinesforex.com/specials/ (use 5ticsharp as the password). I am so familiar with the Metatrader4 order platform that I do not use these currently – however for anyone new to 5TicFOREX they will certainly assist you greatly in placing trades.