This is a guest post by Ahmad Hassam
When you make a mistake in trading, there are no money back guarantees that can give you back your hard earned money. Turnabout is a conservative approach to trading support and resistance. This is the closest to the money back guarantee that you can get when trading support and resistance.
Support and resistance is one of the key concepts in trading. Support is like the floor of a room. When you hit it with a ball, the ball will bounce up. In the same manner, resistance is like the ceiling of a room. When you hit it with a ball, the ball will bounce down.
Support is where buyers start buying thinking the price to be sufficiently low to make a good bargain. On the other hand, resistance is where sellers start selling thinking that the price has gone to high. Whatever, trading support and resistance means buying at the support and selling at the resistance.
A turnabout trader will wait for the confirmation that the suspected support and resistance will hold price before entering into a trade. So, a turnabout trader will wait for the actual turnabout of the price action at the support or the resistance level. This will reduce the number of trades that can be taken but the probability of success of these trades will he much higher than entering into a trade near the support and resistance on guesswork.
Turnabout trader does not guess where the actual support and resistance will lie. They actually wait for the price action to turn and confirm the support and resistance. This also takes out the guesswork out of placing the protective stops. During the turnabout the market will make either a low or high depending on whether it was support or resistance. This low or high will be the protective stop loss placement.
The downside to this conservative turnabout trading technique is that sometimes these turnabout traders miss on other valid support and resistance trades. Aggressive traders will enter into a trade when the price action nears the support and resistance. In some cases, market will move with such force away from the support and resistance that a turnabout trader will be sidelined while these aggressive traders will be in the money. Whatever, if you want to be conservative and on the safe side in your trading, you should wait for the turnabout before you enter into a trade.