|Decision points are same for all traders|
Day traders are creatures of habit and I assume they act at these levels again and again.
Major Decision Points are
- High, Low and Close of the previous day
- Open, High and Low of the trading day
- Major Swing Pivots.
- Big Round Numbers
- Range Highs and Lows
In fact these levels are implied support and resistances. I don’t call these levels support or resistance because these words give a wrong impression that a support is a level to buy and resistance, a place to sell. I always let other traders to fight it out at these levels and try to join the winning team.
Do you know what is so special about these locations? These are markets own levels and market is going to respect its own levels. There is no ambiguity or confusion about these levels. They are very obvious and every trader notices these levels unlike the calculated levels.
More people noticing the level means more people will act there. There will be a lot of order flow here. Market always makes a decision here regarding its future direction. A lot of traders are going to be wrong here. Their exit will create more order flow in the new direction.
|Which moving average? Which time frame?|
Some people enter on price crossover and some others on average crossovers. These traders use different moving averages to make decisions. This varies from 3 periods to 200 periods. Further, some of them use simple averages and others stick to exponential oving averages. In short these traders are identifying different locations to enter and exit their trades.
Decision Points on the other hand are fixed and visible to all the traders. There is no confusion or ambiguity about the levels. Previous day high is the previous day high for all. A Big Round Number is a BRN for all. So naturally there will be a lot of order flow at these levels. Decision Point traders are united and they rule the divided rest.