In today forex faq, I will be sharing with you some tips on how to scout for better entry in your trading.
Below is the question from one of our fellow trader:
How can I pin-point my entries more accurately so that I do not suffer the very large draw downs that I do? With such large draw downs I tend to close out my trades too early; is there a way to confirm better entries?
I believe that this is one question that a lot of you have in mind too. I believe that there are times where you enter a position which later get stopped out and eventually see the price moving in the direction of your trade.
This is usually due to you entering your position too early. Therefore in this article today, I shall share with you 2 ways you can do to make sure that you are not entering too early.
1) Major Support and Resistance – If you see the price approaching a major support or resistance like the Fibonacci levels or Pivot Points, you should refrain from entering your position as there is a very high chance that the price will move to test the major support or resistance level before it starts to move in the desired direction.
Therefore I will for the price to move to the support or resistance before I trigger my entry. This will ensure that I do not get into the position too early.
The reason why you often find yourself being stopped out is because you enter before the support or resistance and when the price moves to test the support or resistance, it then stopped you out. Once it tests the level, it then moves in your trading position causing you to miss out the profit.
2) Wait For Retest – If you are trading breakout or trend line break, you can always wait for the price to come back to retest the valid trend line and then enter your position.
The problem with some traders is they tend to chase the price. When they find out that there is a valid trend line break, they enter a position irregardless of how far the price has moved.
When the price starts to come back to retest the trend line, it will stopped you out and then move in your trading direction causing you to miss out the profit.
The above are 2 ways you can use to optimize your entry so that you will not enter too early in advance. These are ways that I personally use in my trading and therefore is very sure that it will work for you too. If you guys have anything to share, do feel free to give your comment below.
However if you want to have an indicator that can help you to scout for entry, you can take a look at this forex LMT indicator review that I have done.