This scheme will eliminate the complicated issues associated with trade timing, while allowing us great comfort while entering and exiting trades. Doing so, removes the noise and mental confusion that comes with trying to trade from intraday charts. Of course it is possible that by chance a predefined price level is reached precisely at the time that the desired technical pattern occurs, but this is rare, and unpredictable. I have attended the graduate course and have much to learn Watching live trading as much as geographical constraints allow Keen to pick up anything and everything as fast as my brain can assimilate. Furthermore, when price goes down through a support level and breaks it, this level becomes a new resistance and vice versa.
Determination of entry/exit points is the other half-of-trading. No amount of successful analysis will be useful if we can't determine good trigger points. World's best forex .
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In ancient warfare, it was well-understood that the commander must keep some of his forces fresh and uncommitted to exploit the opportunities and crises that arise during the course of a battle.
For instance, if the commander had run out of cavalry reserves when the enemy launched a major charge against one of his flanks, he might have found himself in an extremely unpleasant situation. Similarly, if he had no rested and ready troops to mount a charge at the time his opponent demonstrated signs of exhaustion, a major opportunity would have been lost.
The layered attack technique of the trader aims to utilize the same principle with the purpose of not running out of capital at the crucial moment. In essence we want to make sure that we commit our assets that is our capital in a layered, gradual manner for the dual purpose of eliminating the problems caused by faulty timing, and also outlasting the periods associated with greatest volatility.
By opening a position with only a small portion of our capital, we ensure that the initial risk taken is small. By adding to it gradually, we make sure that our rising profits are riding a trend that has the potential to last long.
Finally, by committing our capital when the trend shows signs of weakness, we build up our own confidence, while controlling our risk properly by placing our stop-loss orders on a price level that may bring profits instead of losses. To sum it up, the golden rule of trade timing is to keep it small, and to avoid timing by entering a position gradually. Since it is not possible to know anything about the markets with certainty, we will seek to have our scenario confirmed by market action through gradual, small positions that are built up in time.
This scheme will eliminate the complicated issues associated with trade timing, while allowing us great comfort while entering and exiting trades. In such cases, the exact price where the position is opened is not very important.
So we will not be discussing such situations in this article. In surveys on what traders find most difficult about trading, timing often comes up as the top issue.
Since timing is the only variable that directly influences the profit or loss of a position, the emotional intensity of the decision is great.
While it is expected that every successful trader will achieve a degree of emotional control and confidence, the pressures of trade timing are often so severe for many beginners that the process that leads to a calm and patient attitude to trading never has a chance to develop.
All these factors lead us to consider the gradual method to be the best one for trade timing, while minimizing our risk. Top 10 forex entry signals. Top 10 forex exit signals. Read more on stop loss orders. I am in a long position after the red bullish trend line.
The thicker parts of the trend show where the price finds support. While I am in my long position, I see the price getting close to an old resistance, which has already been tested few times and has sustained the price of the Yen. Therefore, it is a good approach to secure my position with an exit point below this resistance in order to avoid loss of already gained profit. Whenever the price touches the resistance, a stop loss could be placed below the candle, which has touched the level.
On the image above this is the small orange line. If the price breaks the resistance in bullish direction, then I can reopen my position. But if the price does a rapid drop, I am protected with a stop loss order like in the example above. The stop loss covered us for the rapid decrease, which even got the price out of the red bullish trend. But what if the price bounces from the resistance but then bounces up again from the red trend?
In this case, if I see the price bouncing up, I go long and play again the resistance game with the stop loss. Note that in my example, the quick drop brought a bearish candle far below the trend, which infers the end of the bulls. Therefore, the exit point beneath the purple resistance saved me from an unwanted loss of profit.
This same scenario could be played with an exit point on a support level, but in the opposite direction. For some newer traders, trading support and resistance using an additional Forex tool on your chart for confirmation can sometimes prove helpful.
The reason for this is that support and resistance trading can give us false signals from time to time. For this reason some price action forex traders tend to confirm the signals they get with additional trading tools like candle patterns, chart patterns , oscillators, momentums, etc. One of the most common ways to trade key levels is simply by trying to go with the market flow after the price has shown its bias toward a support or a resistance level.
Buy when the price approaches a support and starts bouncing in bullish direction and sell when the price touches a resistance and starts bouncing in bearish direction. Also, buy when the price breaks resistance and sell when the price breaks support. For example, the price touches a resistance and bounces in bearish direction.
The first candle, which closes lower than the prior candles could be used as a trigger of a short position. At the same time, I stay in the market until the price reaches the next important support zone and closes a candle above the previous one. If this happens I close my short position. At the same time, this gives me a signal to open the opposite position. For this reason, I could go long and do the same but in the opposite direction. I am providing a basic illustration for our purposes here, but in reality, it is not quite as clean cut as we would like at times.
You might find it useful to combine support and resistance with some other confirmation tools to help in your trading decisions. The Momentum Indicator consists of a curved line, which bounces around a or a 0. The Momentum compares the current state of the price to its previous behavior certain periods ago, creating the curved line.
The basic signal which the Momentum gives is with crossing the level line in bearish or bullish direction, giving short or long signals respectively. At the same time, I will exit the market only if the Momentum Indicator starts behaving the opposite way. Take a look at the picture below. The purple line is an important level, which in our example is acting as a support.
This level has been tested as a support and resistance more than 5 times during the last year. Therefore, I consider this a key level and I try to trade it! As you see on the image, during the last meeting of the price with the purple support, the bearish candle closes a bit below the level.
Meanwhile, the Momentum breaks the level in bearish direction, which gives me the second signal I need and triggers my short position. Following up from our article on how to set the entry point for a trade , we now talk about the other half of the equation, which is on how to set the exit point. In setting the exit point, only two factors must be considered.
Some persons reading this may find these considerations strange. But the fact is this: There will be times when your trade will go on to achieve great things by delivering the expected reward for the risk assumed, but there will be other times when a trade which is decidedly not going to end as expected may have to be rescued by either exiting with minimal loss or use a trailing stop to protect any small profits gained.
So let us start the discussion of how to set the exit points for trades that are either going well, or expected to go well. A good trade is one in which there is more reward than risk, with other risk management parameters being applied to the letter. The risk-reward ratio simply refers to the proportion of risk applied to the trade by the stop loss to the reward desired from the trade the Take Profit point. Experts generally prescribe that in a worst case scenario, a trader should aim to make at least 2 pips for every 1 pip risked in the stop loss ; a risk-reward ratio of 1: By extrapolation, it means that for the number of pips set by the trader as stop loss, the trader should multiply this by at least a factor of 2 to get a good risk-reward ratio.
But is it a wise thing to do to simply assign figures to the risk stop loss and the reward take profit? The truth is very far from it. The first principle in setting the exit point i. In other words, a trader who is long on a currency pair should not set a Take Profit point above a strong resistance, while a trader who is in a short position should not set a TP below a strong support.
How to time our trades: Layered trade orders
Characteristics of Forex Entry Point. Platform: Metatrader4; Currency pairs: Any, recommended Major; Trading Time: Around the clock; Timeframe: Any, recommended H1; Recommended broker: Alpari; Buy entry, when there was a vertical line of color Aqua. Exit with the appearance of vertical lines of color Magenta. Typically, finding an entry point starts with solid technical analysis and a plan of action. You want to enter trades for a specific analytical reason – i.e. you’ve isolated a clear trend – and you want to have a plan for potential entry and exit points. But entry and exit strategy is more complicated than that. Forex trading is associated with buying or selling a currency pair in order to profit from the difference between the entry and exit price. Most traders spend more time planning and contemplating entry points than exit points.