Forex traders are always looking for how to find a good trade entry. If this already makes you wonder what I’m talking about, here’s a brief explanation of what a trade entry is.
Trade entry is price target where would you buy or sell a currency pair to achieve a profitable trade that has Best the risk/reward ratio you are looking for.
So, make sure your entries are good, this will help make your trades more profitable. Here are some of the things I’m looking for to find the perfect entry point.
How to find a good trade entry
1. Look for Strong Price Action
When you are looking for a good trade entry, it is important to look for strong price action. This means that the currency pair is moving in clearly and decisively way.
My strategy is based on the price action you see above the support and resistance areas. We really want to see a clear hesitation before the opening of the trade.
If there is no support or resistance and the price does not stop, we Do not enter reversal deal. In addition, if there are more than 3 indecision candles in a row, I will also not open a reversal trade.
For me, 3 or more indecision candles in a row tell me that there is too much indecision. At this point, things could go either way. More often than not, I’ll wait to see if we can get a continuation setup instead of a reversal in an instance like this. To learn more about my strategy, check out the free course.
Price erratic behavior is another reason No enter a trade.
What does erratic price action mean looks like? Let me show you instead of trying to explain:
When the price looks like this, it just doesn’t give me confidence that my entry will be successful. Yes, the price may be in the support/resistance area, and yes, we can see any other signal we are looking for to enter the trade. But the erratic movement of the price repels me.
If it doesn’t look good just don’t take it.
2. Find confirmation on multiple timeframes
A trade entry can look good on one timeframe but be downright awful on another. You want to make sure you double check the timeframes.
If you are taking a trade on the 4 hour chart, it is important to go to the hour chart to check if your entry is at the top of the support/resistance area. Placing an entry there could mean that you are stuck in a trade that will falter for a while. However, the hourly support/resistance area doesn’t mean much if you’re in a daily trade.
On the contrary, if you see a pleasant hesitation on all the time frames that you usually check, this is a great indicator that you have a good entry into the trade.
3. Understand the current market structure
Knowing the general structure of the market will help you make better deals.
Range pairs are great for trading! Especially if the lows and highs of the range turned out to be strong. Buying and selling in these areas of support and resistance is likely to be more profitable than trying to trade a breakout. A good trade entry when the price hits key support/resistance levels. Here is an example of what the range looks like:
At the same time, the trend is your friend! If the market has been generally bearish, a short entry at the top of resistance is more likely to be profitable than a long entry at support, and vice versa. Bullish trend = Long position more likely to succeed. Why? Because of the trend.
This is how knowing the general structure of the market will help you make better trades and get better entries.
4. Don’t ignore the news
It doesn’t matter how perfect the deal looks. never great record if CPI data comes out soon. I know that there are traders who trade on the news, but not me. The CPI data is just one example. I use forex factory to be aware of important news that may appear.
There will always be another trade, so risking it during guaranteed volatility is an unnecessary risk. No one can predict which direction the move will take, so you will most likely hit a stop.
5. Use price alerts and orders to get a good trade entry
Using price alerts and limit orders are great tools to help you get the perfect trade entry. They allow you to step back from your schedules and embrace the emotions. outside trade.
Once you have determined your entry point, place your trade as a limit order and it will be entered automatically for you. Just remember consider spreads!
If you don’t like using orders, set a price alert so you can manually enter a trade. The downside to this is that you won’t be able to enter it when it happens, or you look at the chart and your emotions will prevent you from entering it.
These 5 tips will help you find a good trade entry:
- Look for strong price action
- Find confirmation on multiple timeframes
- Understanding the current market structure
- Don’t ignore the news
- Use price alerts and limit orders to get a good trade entry
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