How to Actually Make Money Trading with Support & Resistance Levels

If you've been day trading for more than five minutes, you've heard about support and resistance. But here's the problem: most traders know what these levels are, but have no idea how to actually trade them profitably.

I'm going to fix that.

After years of trading ES, NQ, and other futures contracts, I've learned that levels aren't magic lines—they're decision zones. And when you know how to read them correctly, they become one of the most powerful tools in your trading arsenal.

Let's talk about how to actually use them to make money.

Why Most Traders Lose Money at Levels

Before we get into the winning strategies, let's talk about why most people fail:

Mistake #1: Treating every level like it's equal Not all levels are created equal. A support level that's been touched 15 times across multiple timeframes is WAY more significant than some random swing low from 20 minutes ago.

Mistake #2: Trading the first touch The first time price hits a level? That's usually a trap. The magic happens on the second, third, or fourth touch when everyone remembers "oh yeah, we bounced here before."

Mistake #3: No context A resistance level means nothing if you're in a strong uptrend with momentum buyers piling in. Context is everything.

Mistake #4: Ignoring important session levels Prior Day High/Low, Overnight High/Low, Pre-Market levels—these are where the real players are watching. Retail traders ignore them. Professional traders use them religiously.

Now let's fix all of this.

The Foundation: Understanding Level Strength

Not all levels are equal. Here's how I rank them (and how the StrataLevels indicator scores them):

Strongest Levels (★★★):

• Prior Day High/Low - Everyone watches these
• Weekly highs/lows - Institutional memory
• Multi-timeframe convergence - When 5min, 15min, and 1-hour all agree on a level
• High touch count - A level that's been respected 10+ times
• Recent touches - Levels that were relevant in the last 24 hours

Medium Strength Levels (★★):

• Single timeframe S/R - Valid but less significant
• Pre-Market High/Low - Important for the first 30-60 minutes
• Overnight High/Low - Key for overnight context
• Prior Day Close/Open - Psychological levels

Weaker Levels (★):

• Random swing highs/lows - Low touch count
• Old levels - Haven't been touched in days/weeks
• Chart timeframe only - Not confirmed on higher timeframes

The key insight: Focus your trading on the strongest levels. This is where the probability is in your favor.

Strategy #1: The Rejection Play (My Bread & Butter)

This is the highest-probability setup I know. Here's how it works:

Setup:

1. Identify a strong level (★★★ strength, minimum 3 prior touches)
2. Wait for price to approach the level
3. Look for a rejection - price gets close but can't break through
4. Enter on confirmation - a solid reversal candle

Entry Rules:

• At resistance: Wait for a bearish engulfing or strong rejection wick
• At support: Wait for bullish engulfing or strong bounce
• Stop loss: Just beyond the level (usually 4-8 ticks for ES/NQ)
• Target: Next significant level or 2:1 reward-risk minimum

Why This Works:

When price approaches a strong level, traders have memory. They remember "we sold here before" or "we bought here before." The level becomes a self-fulfilling prophecy because everyone's watching it.

Real Example:

Let's say ES is trading at 4525, and there's a ★★★ resistance at 4532 (Prior Day High + 15min S/R convergence + 8 prior touches).

Price rallies into 4530-4532, shows signs of struggle (wicks, small bodies, volume drying up), then prints a bearish engulfing candle.

Entry: 4529 (after confirmation) Stop: 4534 (just above the level) Target: 4517 (next support)

Risk: 5 points Reward: 12 points R:R: 2.4:1

That's a winning trade even if you're only right 50% of the time.

Strategy #2: The Breakout & Retest

Most traders try to fade every level. Smart traders know when to go WITH the break.

Setup:

1. Strong momentum approaching a key level
2. Clean break with volume and conviction
3. Retest - price comes back to test the broken level
4. Entry: When the old resistance becomes new support (or vice versa)

Entry Rules:

• Wait for the break - don't anticipate
• Wait for the pullback - don't chase
• Confirm the hold - 1-2 candles finding support/resistance at the old level
• Stop loss: Back below/above the level
• Target: Next major level

Why This Works:

When a significant level breaks, it often becomes the new support/resistance. Traders who missed the initial move pile in on the retest, creating a second wave of momentum.

Critical Tip:

Only trade breakouts of strong levels (★★★). Weak levels break all day long and mean nothing.

Strategy #3: Range Trading Between Levels

When the market isn't trending, it's ranging. And ranges = opportunity.

Setup:

1. Identify the range - Clear support and resistance
2. Confirm with time - Price should be respecting both boundaries
3. Trade the extremes - Buy support, sell resistance
4. Stay out of the middle - No man's land

Entry Rules:

• Only trade near the boundaries - Never in the middle
• Use smaller size - Ranges can break at any moment
• Set alerts - For breaks above/below range
• Stop loss: Small and tight (outside the range)
• Target: Opposite boundary

When to Stop:

The moment one boundary breaks with conviction, the range is done. Don't be the last trader trying to fade it.

Strategy #4: Opening Range Plays (The Pro Move)

This is where Prior Day levels, Pre-Market, and Overnight levels become gold.

The Setup:

Every morning, the first 30 minutes (9:30-10:00 EST for stocks/futures) establishes the Initial Balance or Opening Range.

Professional traders use these levels combined with Prior Day levels to make high-probability decisions.

Key Levels to Watch:

1. Prior Day High/Low - Will we break out today?
2. Prior Day Close - Bullish or bearish vs. yesterday's close?
3. Overnight High/Low - What happened while we slept?
4. Pre-Market High/Low - Where did the opening auction find value?
5. Opening Range High/Low - The first 30-minute range

The Trade:

Scenario A: Inside Day Setup

• Price is between Prior Day High and Low
• First hour establishes a tight range
• Trade: Breakout of OR High/Low toward Prior Day boundary
• Target: Prior Day High or Low

Scenario B: Breakout Day Setup

• Price breaks above/below Prior Day High or Low
• Strong momentum and volume
• Trade: Breakout & retest of Prior Day level
• Target: Extension (1-2x the average daily range)

Scenario C: Failed Breakout

• Price breaks Prior Day High/Low
• Fails to hold and reverses back inside
• Trade: Fade the breakout, target middle of range
• Stop: Just beyond the failed breakout level

Why This Works:

Institutions and algorithms all watch these levels. When they act, volume comes in. Volume = movement. Movement = opportunity.

The Multi-Timeframe Edge

Here's a secret that separates pros from amateurs: timeframe alignment.

When multiple timeframes agree on a level, that level is STRONG.

Example:

• 5-minute chart shows resistance at 4550
• 15-minute chart shows resistance at 4550
• 1-hour chart shows resistance at 4550
• AND it's the Prior Day High

That's a ★★★ level. The probability of a rejection or significant reaction is extremely high.

How to Use This:

1. Identify levels on your trading timeframe (e.g., 5-minute)
2. Check if they align with higher timeframes (15-min, 1-hour, daily)
3. Give extra weight to aligned levels
4. Only trade the strongest setups

StrataLevels does this automatically by tracking support/resistance across 4 different timeframes and scoring them by strength. The levels with the highest touch counts across multiple timeframes get ★★★ stars.

Risk Management: The Part Nobody Talks About

You can have the best level strategy in the world, but without proper risk management, you're toast.

Rule #1: Never Risk More Than 1% Per Trade

If you have a $50,000 account, max risk = $500 per trade. Period.

Rule #2: Position Size Based on Stop Distance

• Small stop (3-5 ticks) = Bigger size
• Large stop (10-15 ticks) = Smaller size
• Always calculate: Position Size = (Max Risk $) / (Stop Distance in $)

Rule #3: Respect Your Stops

Levels fail. Breakouts fail. Everything fails sometimes. When your stop hits, take the loss and move on. Holding and hoping kills accounts.

Rule #4: Scale Out

Don't always swing for the fences. Take some profit at 1:1, let the rest run to 2:1 or 3:1. Partial profits keep you mentally strong.

Putting It All Together: A Daily Routine

Here's how I trade with levels every single day:

Pre-Market (8:00-9:30 AM EST):

1. Mark Prior Day High, Low, Close, Open on my chart
2. Identify Pre-Market High/Low
3. Note Overnight High/Low
4. Scan for multi-timeframe S/R convergence
5. Create a game plan - Which levels are likely to be important today?

First Hour (9:30-10:30 AM):

1. Watch the Initial Balance form
2. Note the Opening Range High/Low
3. Look for early rejections at key levels
4. Wait for a high-probability setup (rejection or breakout)

Mid-Day (10:30 AM - 2:00 PM):

1. Trade rejections at proven levels
2. Avoid choppy ranges (if the market is slow, don't force it)
3. Wait for clear setups at ★★★ levels

Late Day (2:00-4:00 PM):

1. Watch for range breaks as institutions get active
2. Respect closing momentum
3. Be extra careful near the close (don't get caught in a squeeze)

Post-Market:

1. Review my trades - What worked? What didn't?
2. Mark tomorrow's key levels (Prior Day levels just updated!)
3. Journal any observations

Common Mistakes (And How to Fix Them)

Mistake: Trading every level

Fix: Only trade ★★★ levels with clear confluence

Mistake: Entering too early

Fix: Wait for confirmation (rejection candle, volume, momentum)

Mistake: Stops too tight

Fix: Give the level room to breathe (4-8 ticks for ES/NQ minimum)

Mistake: No target plan

Fix: Know your exit BEFORE you enter

Mistake: Ignoring context

Fix: Is the market trending or ranging? Trending markets break levels. Ranging markets respect them.

Mistake: Overtrading

Fix: Sometimes the best trade is no trade. Wait for A+ setups.

The Tools That Make This Easier

Look, you can do all of this manually. Draw your levels, keep track of touches, calculate strength in your head.

Or you can use tools that do it for you.

That's why I built StrataLevels and StrataLevelsPro. They automatically:

• Track multi-timeframe support/resistance
• Score level strength (★★★ for the best ones)
• Plot Prior Day High/Low/Close/Open
• Show Pre-Market and Overnight levels
• Count touches and update in real-time
• Display clean, professional labels so you know exactly what you're looking at

StrataLevels gives you S/R + Prior Day + Session levels for $149.99.

StrataLevelsPro adds Initial Balance and POC/Value Area for $299.99.

Both are lifetime purchases (no subscription), work on NinjaTrader 8, and save you hours of manual work every day.

Final Thoughts

Trading with levels isn't about finding magic lines that predict the future. It's about finding high-probability zones where trader behavior becomes predictable.

When you combine:

• Strong levels (★★★ confluence)
• Clear setups (rejections, breakouts, retests)
• Proper risk management (1% rule, calculated stops)
• Market context (trending vs. ranging)

You create an edge. And in trading, a small edge compounded over time = serious profits.

Start simple:

1. Focus on Prior Day High/Low
2. Wait for rejections or clear breakouts
3. Use proper stops
4. Scale out of winners
5. Journal everything

Master this, and you'll be ahead of 90% of traders out there.

Now go mark those levels and trade smart.

Want StrataLevels or StrataLevelsPro? Check them out at stratatrading.io

Questions? Email me at [email protected]

Trade well, Erik