The truth of trading 3--The Simplicty

Simplicity works on two levels-- simplicity of design and simplicity of support and resistance levels.

Less is best in designing methedologies. If you have too many components with adjustable variables, then logically more can go wrong. And you need to avoid the intellectual trap trading presents.

At its core, trading is simply the identification of potential support and resistance levels that allow traders to:

*place precise stops that when triggered provide evidence the potentail support or resistance level has failed

* enjoy profits when the potential support or resistance level holds.

It's important to remember this. Keep it simple --don't complicate what you are doing. As traders, you are simply looking to identify potentail support and resistance levels. You should  enter a trade because they believe the potential support and resistance level will hold and provide them with profit. Stops are placed where traders think the market will prove the potential support or resistance level has failed. Successful trading is nothing more,nothing less. 

You buy because your methodology believes the market has found potential support and it will move higher. You place your stop at a level you believe your methodology's analysis will be proven worng. You sell because your methdology believes the market has hit potential resistance and it will move lower. Again, you place your stop at a level you believe your methedolegy's analysis will be proven wrong. 

Make sure you regularly lift your head from your analysis and keep an eye on the bigger picture-- is the market looking at potential support or resistance? It's so simple.