Identifying Significant Price Levels

One of the challenges faced by beginning or junior traders approaching the market is identifying significant price levels. These levels give a reference frame to understand price action. When I started to trade I am unable to place market movement in a framework and make sense out of it .However tentative it may be it provides a discipline and allow the trader emotional control.

1. As I gained more experience and paid the market for the tution and education I found more resources which helped me to find the reference points.


2. Following Dr Brett , I reduced the data visible on my screen to Open, ATP, %Chg, Volume. I am trying to focus more on PDH and PDL rather than day high and day low .


3. VFMDIRECT is another resource to identify significant levels like PIVOT POINTS, R1,R2 and S1,S2. Moving averages are also given.
4. JustNifty gives lot of data to understand price action for Nifty. These levels and their explanation puts into perspective the apparently random movement of the market.
5. ICharts is another good resource for various screeners and price levels. When I chat with traders they repeatedly assume and express their feelings without reference to objective levels or data points. I may feel the market is gioing down or up but unless data ( MAs, Trendlines, Sector strength etc) coorobarates my view I am simply hallucinating and acting randomly.
6. My inspiration for this post comes from the God of Modern Trading Psychology
7. The concept of hard vs Soft levels in trading using volume traded at that level at SMB Capital. I think experienced traders distinguish betwwen levels like a shepherd distinguishes between each of his sheep where as for an external observer all sheep are alike.
8. Round numbers also provide mangnetic attraction. Watch round number 5000 on Nifty and stocks like HDIL at 400. More on round numbers from my friend and DailySpec member and author .