Day Trading Basics – A Step-By Step Guide for Beginners

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Day Trading Basics – A Step-By Step Guide for Beginners
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In this video I’m going to cover a topic that I get many beginner questions on. It is a beginner’s topic that every rookie trader needs to understand.

So what exactly is support?

A support level in trading is a price area where price tends to use as support as it is going down. In layman’s terms it is an area in price where price tends to use as a floor when going down.

Think of the floor in most homes. It holds as support to all your belongings, furniture and most importantly you and your family. If it wasn’t there then the support holding you up wouldn’t be very solid.

So, why is support so important?

The reason that it is considered very important by most traders is that price is likely to bounce off this area of support rather than break through it. However, once it does breakthrough the area than it is likely to continue going until it finds another area of support.

Let’s go ahead and look at some support areas in real time. And let’s discuss a few other important things about these areas. These couple of things are day trading basics.

1. It isn’t exactly one price point. Think of it as an entire area.

2. Not all support areas are created equally. Some are typically stronger than others. And you shouldn’t treat them as if they were equal.

3. Support can also be along a trend line.

How to tell:

Understand that this is the way that I personally gauge support in my own personal system. Other traders might not agree with how I do things, but that’s the beauty of trading. You can tailor your system to however you like to do things. After you’ve done this the only thing that you have to worry about is executing that system consistently over time.

I consider an area of support strong not by the number of times price has bounced off but by the number of times it changes direction of the market. When support does this that means it’s very strong. Think about it. If it doesn’t change direction of the market then it’s not as strong as an area that does.

Again remember that this is something that works for me in my system but might not necessarily work for you. So, use it at your discretion. I’m only including this because I promised to reveal everything I use in my trading system. This is one of those things that falls under day trading basics, but I still decided to include.

Finally I wanted to cover other areas of support which include fibonacci extensions. Fibonacci extensions are used by many traders to help them see the different areas that the market could run to. They are beyond the scope of this video but if you wanted to learn more about them than I suggest you Google them to find more information. Hopefully you learned something from this short video on day trading basics.