What are support and resistance levels?

1. Open the symbol on 1D with a long range, such as 6M or 1Y.
2. Use the drawing tools to mark each zone where price turned at least twice.
3. Switch to 4h and refine the zones. Delete levels that price has sliced through many times.
4. Keep only the two or three zones nearest to the current price.
5. Set an alert at each zone, so you are told when price arrives instead of watching the screen.

A clean chart with three zones beats a chart with fifteen lines. If every price is a level, none of them is.

Levels break. When price closes clearly through resistance, that old resistance often becomes support when price comes back to it. This is called a retest.

You can trade it two ways. A buy stop just above the level catches the breakout, but it also catches false breaks that snap back. A buy limit at the old level waits for the retest; it gives a better price and a tighter stop, but you miss the trade if price never comes back. Neither is better in every case. Choose one style and stick to it long enough to judge it in your journal.

A clear break usually means a candle that closes beyond the zone, not just a wick that pokes through it. Wicks through a level that close back inside are often false breaks, and they are where breakout stops get caught.

You will not avoid every false breakout. Wait for a candle to close beyond the zone, for follow-through, or for a retest that holds from the new side. A break that stalls and falls straight back into the range is a warning sign.

The stop belongs where the level has clearly failed. For a buy at support, that is below the whole zone plus a small buffer. With support at 1.0800–1.0810, a stop at 1.0790 gives the zone room to work. A stop at 1.0805, inside the zone, can be hit by an ordinary wick.

Say you buy at 1.0815 with the stop at 1.0790: 25 pips. On a $10,000 account at 0.5% risk, that is $50, so the volume is $50 ÷ (25 × $10) = 0.20 lots. A wider stop means a smaller position, not more risk.

The next zone in the direction of the trade is a natural take profit. If you buy at 1.0815 with the stop at 1.0790 and resistance sits at 1.0865, the target is 50 pips for 25 at risk.

Then read the ticket. The box If the stop loss hits shows your daily loss limit and overall loss limit before and after the stop. On a $10,000 1-Step Challenge account the daily limit is $500; a $50 stop uses a small part of it, and you can see exactly how much.