The ideal trade entry is one that allows for proper stop loss placement and substantial risk/reward potential. Easier said than done, right?
Well, maybe not. Such a “perfect” deal entry may not come often, but that doesn’t mean it’s “hard” to find. Learning how to find them requires training combined with screen time.
There are basically three processes I use to find the ideal trade entry. In a nutshell, what I always do when looking for a new trade entry, this is how I think and how I look.
Three keys to finding the “perfect” trade entry:
The easiest way to do this is to first look for really obvious price movement signals on the daily chart timeframe. The daily chart timeframe that trades at the end of the day is my favorite trading method. I’m looking for “stand out” signals or patterns. These aren’t hard to find once you get used to the setups I teach.
Then look for trade confluence factors that support the signal. In other words, you are “reverse engineering” the transaction, so to speak. Once you’ve found a signal, look past the chart to see if the signal bar isn’t aligned with other significant levels, is forming after a pullback within the trend, or has some other kind of confluence with the chart. Check if
Basically, if you want to find the “perfect trade entry point”, you need to line up as many supporting factors as possible. The last thing you want to do when you find confluence signals is to see if you can “adjust” your entries to increase your trading risk and reward potential (this is a more advanced concept). Not, but it can improve risk and reward. More on this in my professional trading course).
Note: A “perfect” trade entry doesn’t really exist, but you can look for trades with the most “weight” behind them, or with confluences.
Here’s a quick breakdown of the three main elements of a “perfect” trade entry:
- Finding signals, patterns and levels to trade with, this is somewhat obvious, but it is also a skill that needs to be developed and refined. This tutorial uses the pinbar entry signal and the tailbar entry signal.
- Look for entry filters and confluence factors. Strong trends, key horizontal support and resistance levels, 50% swing retracement levels, other historical signals (event areas), moving averages, etc. to support your trades.
- Entry adjustments and tricks. Just considering a nearby key level as a more optimal entry point, such as his 50% fine-tuning retracement entry on the signal bar itself, allows for better stop placement and larger targets.
My typical daily routine for finding the “perfect” trade entry is:
Wake up in the morning and eat a healthy breakfast (of course I have Vegemite sometimes) and do my morning exercise then flip through the charts to see what happened after the US trade closed, remember Please, I am concentrating on the New York trading charts. I live in Australia, so when I wake up in the morning, it’s between the previous day’s US close and European open, so I watch the daily charts of exchanges, stock indices, and major commodities to see what happened earlier. have a good time. They are starting to move again in Europe. Or if you’re looking at your local Australian market, it’s morning, so if there’s a deal there, it’s a great time to get in on the deal.
My goal is to quickly scan my favorite markets to trade, looking for obvious trading signals/patterns that give me an edge in the market. If you find one, filter the trades by finding reasons to back them up or match the surrounding market structure. I’m also wondering if the deal doesn’t make sense at this point. Just because we see a potential signal doesn’t mean we trade it all the time. If a signal has few or no supporting confluences, I probably wouldn’t trade it.
Finally, if you find a signal that meets your criteria and makes sense with the surrounding market structure (confluence), enter into that signal with the goal of optimal stop loss placement and high risk reward potential. Find the best and most logical way. .
Let’s look at some examples.
Example 1:
In the chart below, there appeared to be many confluences behind the very obvious daily EURUSD pinbar sell signal. This is explained in the chart below. Note that the tail of this pinbar is clearly sticking out from the nearby flat at the moment. This marks a sharp reversal and rejection in that price range, suggesting that the price may drop in the coming days. I didn’t have to search long or hard for this signal, it literally “popped” off the chart.
In the following chart we see what kind of “evidence” there is for this pinbar signal. In this case, there is certainly sufficient evidence to justify trade entry. As you can see in the chart below, the market has been on a multi-month downtrend, forming a signal after a pullback to resistance, at which point a significant resistance zone was formed. The signal itself was also well-formed and unambiguous. In my mind this deal was a ‘go’ and all we had to do was set it up, pull the ‘trigger’ and go see a movie or play golf. , and all I did was do what I liked.
Now let’s zoom in on the pinbar above. We are currently focusing on ‘fine-tuning’ entries to see if we can improve the risk-reward potential in trading. Note that entering close to the 50% point of the pinbar in this trade can significantly improve your risk reward ratio. Realistically, it would have been difficult for him to enter the pin at exactly 50% as the price barely reached that level before dropping again. However, somewhere below that 50% point he could have put a stop on the pin and entered the pin retrace. Logical stop placement and his strong 3R to 4R profit potential in the trade.
Example 2:
In the example below, we are examining the daily SPI 200 (Australian Stock Index) chart. One look at this chart and the circled pinbar below immediately caught my eye. It clearly lines up with the overhead level of the daily chart timeframe. The tail of this pinbar was clearly sticking out, marking a sharp reversal in price.
The chart below is a weekly chart of the above daily chart. When I find a trade on the daily or 4-hour timeframe, I check the weekly chart to see how the signal makes sense within the longer timeframes, or even at all. often. In this case, the pinbar on the daily chart is formed with a very strong key resistance level/event area on the weekly chart, as seen below. It also formed along a downtrend on both the daily and weekly charts.
Finally, you will see an expanded daily chart of the pinbar signal you are trading. Note that while a retrace/tweak entry was not possible here, there is still ample 2R reward potential for this trade as the next support did not come well below as seen below. please give me. Such trades, formed at key levels/event areas, with a trend behind them, meaningful on a daily and weekly basis, often lead to quick and big moves…
Example 3:
In the following example, we will examine several bearish tail bar signals formed on the daily crude oil chart. A very strong downtrend is present and you can quickly see that these bars formed just below the key resistance level after the price broke and closed below that level just before. These signals may not “pop” off the charts like his first two examples, but given the momentum behind this market downturn, for a trained price action trader It would have been the obvious setting.
Zooming out a little more, we can clearly see the magnitude of the overhead levels and the trend. The confluence of these strong supporting elements has effectively made this trade “easy”.
Zooming in on the signals on the daily chart, even though the stop loss was just above (and above) the first tail bar high, the market was in a truly massive situation, so this trade was worth it. still has a large potential risk reward. runaway tendency. These types of trends are great for taking pyramid-shaped positions and making big profits. Note that just one position here could have easily made him a 5R profit. Not a bad payday.
Conclusion
I hope the main takeaway from today’s lesson is that the best trades are those that are formed by multiple supporting factors. In all the examples above, trends were very evident and signals were formed at key levels of the market. This is not difficult once you have the knowledge and understanding of what you are looking for. However, there is an “art and science” out there and it takes some training, time and intuition to get really good at it.
Just remember that we are looking for the “intersection” between signal and level, or signal and trend, or just level and trend, as in the case of blind entries. Basically, what we’re doing here is trading like snipers, waiting for the right evidence to give us the go-ahead to trigger the trade. All of this becomes easier when you understand how to read the money footprint, or price movement, on the chart. However, it takes passion and dedication, but as I’ve gotten older, I’ve realized that charts, even the randomness in them, have become more and more understandable to me.
Trading is the ultimate test of self, so if you want to be successful you really have to take the ‘long term’. The market exposes all your human flaws. And how long it will take before you start making really steady money in trading or if you do all that mostly depends on how quickly or if you can accept and fix these flaws determined by This part of the deal isn’t easy, but there are people who can help. Other traders who understand what you are going through and what you are going through.
Learn To Trade The Market is a collective community of over 20,000 members, all on the same mind and with the same end goal of trading successfully. My members follow the trading ideology, processes and concepts described in this article and I extend it in my advanced courses. This is why I created “Learn to Trade The Market”. Because this allows me to perform the above routine and “look over my shoulder” through my daily trade configuration newsletter, which combines it with the core teachings of my course.
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