Tips for the Right Entry When Trading
Entry is very important and determines the final result in forex trading. A scalable and efficient entry method will determine trading success in the long run. However, many traders think that entry is an easy thing to do and do not look for the best possible entry to obtain optimal trading results. The right entry will provide a better risk/reward potential including adequate stop loss placement. Here are some tips for the right entry:
Prepare For Entry and Evaluation
Make a checklist to determine entry criteria, such as support or resistance levels that are considered important, high probability trading signals, estimated entry levels, risk/reward ratios and others. This checklist is also for evaluating trading results as a reference or to be corrected in the next trade. A checklist is needed to make it easier to recognize the characteristics of the movement of the currency pair that the trader is trading.
Placing Limit Orders for Entry Level Accuracy
A limit order is a pending order that is set above or below the market price. It is up to the trader himself to decide. If the trader is trading long (will open a buy position) then the trader can open a buy entry limit below the current market price. If the price moves up to the entry level that the trader wants, the sell order will be executed.
Limit orders allow traders to get an accurate entry price as desired. One method that is often used is the entry limit order at the 50% retracement of the trading signal because the probability of trend continuation at that level is usually high, thus traders can place the stop level with the smallest possible distance until a high risk/reward ratio is obtained.
Set Up Trade At Market Close
Forex traders assume the closing price is the price when the new york market closes. At that time only the New Zealand market was just starting to open and the trading volume was relatively very low.
To avoid the market, traders can analyze and setup around that time, determine important resistance and support levels, see possible trading signals and predict the trend of price movements on the next day. For analysis it is highly recommended to use the daily time frame.
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