Stormwolf wrote:
Is there a study showing that WRB type analysis works?The reason I ask this is because it seems there are studies showing price has a easier time going through areas it visited in the past compared to areas where it haven't
Hi, Thanks for the question and it's a good one because I get this question a few times per month via email by other traders interested in WRB Analysis.
First of all, your question implies that you have already realize that WRB Analysis is about key price zones as in support/resistance or some sort'uv pivot point analysis. Yeah, I've too seen reports in the past about traditional s/r levels or pivot point that show price usually doesn't respect past key price zones in that price moves through it.
However, those reports, stats or whatever are confusing via the fact that they imply the support/resistance are trade signals. For example, implying that once price hits a support area it should be a buy signal or when it hits a resistance area it should be a short signal.
Support/Resistance are
not trade signals and that's the main problem with traders using them because most traders apply s/r levels or analyze them via the perspective that they are trade signals.
In contrast, support/resistance are price areas where there was a change in supply/demand and nothing more. Therefore, the key is the design an independent trade signal that if it occurs within whatever you called support/resistance...it's tradable. Therefore, if you get a trade signal that's not at/within a support/resistance area...it is not tradable.
Simply, the
best way or the only way to determine the merits of any type of support/resistance if via comparing the performance of your trade signals at/within a support/resistance area versus your the performance of your trade signals that are not at/within a support/resistance area.
Even more, pretend you're already using some sort'uv personal support/resistance analysis and you notice the performance of your trade signals
improves when using WRB Analysis in comparison to your personal use of support/resistance...
It would imply that WRB Analysis is more efficient in identifying key changes in supply/demand. However, you can't accurately test the merits of WRB Analysis if you don't already have a trade signal and that's also why I can't test it for you (provide statistics) because I don't know what are your trade signals nor do I know how you actually apply your trade signals...
Reason why your own personal testing will be more accurate than my own testing of your trade signals or the testing performed by someone else using a completely different trade signal (e.g. Fib trader versus breakout trader).
As a reminder, WRB Analysis is not a trade signal. Instead, WRB Analysis identifies key changes in supply/demand so that if you get a trade signal within a WRB S/R Zone via whatever trade signal your using...it's tradable regardless to the direction of your trade. Thus, just because price is declining and it reaches a WRB S/R Zone...it doesn't imply you'll be looking only for buy signals. It implies that short or long signals are valid but only if they occur within the WRB S/R Zone.
Just as important, WRB S/R Zones are profit targets. Thus, regardless if your trade entry occurred within a WRB S/R Zone, traditional s/r levels, pivot point, indicators or whatever...as soon as your trade reaches a WRB S/R Zone...it's a profit target and you strongly need to consider exiting the profitable trade unless you have reason to believe price will continue in your favor to the next WRB S/R Zone.
Last of all, one of the main flaws with traditional s/r levels is that they actually have a lifespan and traders either use a s/r level too long or not long enough. In contrast, a particular type of WRB S/R Zone contains specific instructions about how long to use it via my +20 years of market expericence that's translated into market psychology because it's greed and fear that moves prices.
Therefore, I will share my market experience in helping traders how to understand the price action of whatever they are trading via identifying price areas that represent key changes in supply/demand resulting in an improve trading performance of whatever trade signal you may be using.
P.S. I've attached an annotated chart of your chart with current unfilled WRB S/R Zones that can be used to confirm whatever trade signals you may be using. There's three key areas of changes in supply/demand annotated for you to use to measure the performance of your trade signals within those zones versus your trade signals that don't occur within those zones.
However, be aware that as each trading day goes by...new changes in supply/demand occurs. Thus, there'll be new zones.
Best Regards,
M.A. Perry
http://www.thestrategylab.com
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