How to determine when to enter the market. The best forex entry points - means of determining the exact positions
do you know how it is safe to enter a trade Forex when opening the first order? To do this, you just need to strictly follow several simple rules... Let's recall them:
- - always use stop loss;
- - the maximum loss in one trade should not exceed 1% of the entire deposit.
It's pretty simple, isn't it? Now, relying on these rules, let's consider such an algorithm for entering a trade, in which we will take risks only at the moment of opening an order. This algorithm is called the Safe Rule. According to this rule, after opening a deal, we can get two situations:
- 1) The price goes "not in our direction" and we get a loss of 1% of the deposit;
- 2) The price goes "in our direction", we close part of the deal and "are in the market" without any risks.
Everything is clear with the first point - we get a loss and "go to catch" the next entry point. But let's take a closer look at the second point.
Safe Rule when opening a deal.
The purpose of an ordinary safe, which you may have seen in an office or a bank, is to safeguard the funds of their owner. So the Safe Rule in Forex has the goal of preserving the trader's funds. You kind of put part of the profit from the deal in a safe, protecting yourself from possible losses. And it is these rules that will be discussed today.
To trade successfully on the Forex market, you need to not only successfully enter and exit the market, but also try to protect your deposit from being drained. It is for this main purpose - preserving the deposit, your trading system should be supplemented with some rules. For example, in which, in the event of an incorrect opening of an order, the trader will not receive a loss. Although, this is not a panacea - 8 out of 10 trades transferred to breakeven are closed "at zero". We think that you have often come across such a situation - the transaction is at breakeven, the price goes in the right direction. But suddenly - it turns sharply, "catches the tail" of the stop-loss candlestick, knocks out the deal and then goes in the right direction. Several points are missing to make a profit! Sound familiar?
There is another possibility to trade Forex safely and close trades opened in the wrong direction without loss. This opportunity is called the Forex Safe Rule:
Safe Rule - a part of the order should be closed with a small profit and in such a way that the profit obtained is equal to the loss if it turns out that the deal has been opened in the wrong direction and the second part of the deal is closed by stop loss.
Opening deals "not at random", but according to the strategy, in 80-90% of cases you get a short-term price movement in the direction you need. This movement can be 10-15 points, after which the price is quite capable of turning "against you". How to proceed? The price has passed 10 points - to transfer the deal to breakeven? With a 90% guarantee - the next candlestick order will be knocked out. Although it is breakeven, there is no profit either. Consider another option - after the price has passed 10 points in the direction you need, close half of the deal, and set the second SL by the same 10 points. And with this you "kill 2 birds with one stone" - move the SL 20 points away from the price (the risk that the price will hit the stop loss becomes significantly lower!) And you are already "in the market" without risk!
Graphically, the Safe Rule looks like this:
Rice. 1. The Rule of the Safe in a graphic representation.As you can see from Figure 1, after receiving a signal to enter a sell trade (for example, breaking through an important level), we open an order that is larger than the minimum allowed for your account type and can be divided by two (in order to close half of transactions). The price passes 15 points - we close a part of the order and stay with half of the original deal and, at least, at breakeven. This is a general part of Safe's idea, although in practice it is worth doing a little differently.
The fact is that you may not catch the price fluctuation in the direction you need - and, as a result, you simply will not have time to close half of the order! And sitting and waiting stupidly for the situation you need is not entirely correct. The way out is simple - you need to open two orders with the same volume. As applied to Figure 1, two sell orders are opened with a volume of 0.5 each. Stop loss for both orders is set at 15 points. The take profit of one order is 15 points, the second is set according to your strategy.
Observation from practice! When you open two market orders in a row, in 95% of cases you will not be able to open them at the same price - the difference can be several points. Until the first order is executed, until the broker receives the command to execute the second - the price can easily "fly away" by N points. In this case, the SL of both orders is placed at a distance of 15 points from the price of the order opened "at the worst price" (if this is allowed by market conditions). Take-profit of 15 points is also set for an order opened "at the worst price". For you to understand the expression "order opened at the worst price", we will give a specific example. You open the first (sell) order for the EURUSD currency pair at 1.2463, and the second order at 1.2460. An order opened at a price of 1.2460 will be considered "open at the worst price".
Features of the practical application of the Safe Rule on Forex.
a few more points. For the "worst" half of the deal, it is necessary to set a take profit level to which the price almost always reaches according to the traded system. As a rule, a distance of 10-15 points, with a correct Forex forecast, the price passes in 90-95% of cases. The main TP level can be set in the amount corresponding to your trading system. Stop-loss is also set at 10-15 points in the opposite direction. As soon as the price reaches the first TP level, half of the trade is closed, in the window trading platform Terminal, Trade tab, a line with information about the profitable closing of the deal will appear. The second part of the order remains in the market, and how it closes will depend on the price movement. If the price reverses and reaches the SL level, the trade will be completely closed, the size of the loss on the second part of the order will be equal to the profit on the first part, and the overall result will be zero. If the price moves further, then the trader will make a profit on the second part of the order:
Rice. 2. The total profit for a successful transaction subject to the Safe Rules.
one more "trick" when fulfilling the Safe Rule, which may be needed in case of a non-standard situation on the market. Consider this situation on specific example - currency pair EURUSD, deposit $ 16,000, open two trades total volume unit and with stop-losses of 16 points. At the same time, we do not violate - the total loss from the transaction is 1% of the deposit.
So, you entered a trade with a volume of 1, but you understand that you entered incorrectly and the price will not go the required distance to the take profit of one of the orders. For example, TP and SL are set at 16 points, and the price can swing in the right direction by only 8 points. What to do? We close one order with a take profit of 8 points and, plus, close half of the second order at the same price. As a result, we get - 0.75 orders with a take profit of 8 points are closed, 0.25 orders with an SL of 16 points remain in the market. We go to the page and count - with a lot, volume of 0.75 and a take of 8 points, we have 60 dollars of profit:
Rice. 3. Calculation of the TP cost at the close of 0.75 lot.
With a lot with a volume of 0.25 and an SL of 16 points, we have a loss of $ 40:
Rice. 4. Calculation of the SL value at the close of 0.25 lot.
In total, we have for the whole deal +60 and - $ 40, which is equal to $ 20 of profit. Based on the results obtained, we can afford to increase the SL of the remaining part of the transaction in the market to 24 points, and even if we “catch a moose”, we will not get a loss! In addition, do not forget that we have moved the SL by 32 points from the price - the likelihood that the trade will be eliminated by the stop becomes much lower!
This is the "beauty" of a safe entry into a trade - a trader takes a risk once, at the moment when he enters the market. If immediately after entering the market, the price reverses without reaching the first TP level, and the deal is knocked out by SL, then the trader will lose exactly 1% of his deposit. If this does not happen, and you close part of the transaction according to the Safe Rule - in the future there is only one possible variant- Receiving a profit!
Conclusion.
We recommend that those traders who have come to this page and are interested in safely entering a Forex trade (Safe Rule), seriously study the proposed information, deal with the calculations of the order volume, the cost of take profit and stop loss, and practice implementing the Safe Rule.
What is it for? Applying the Safe Rule in practice will allow you to significantly improve the trading results for your strategy. And besides this - a scrupulous understanding and implementation of the rules of safe entry into a transaction will allow you to engage, for example, or trading on the news where you will risk only once - when you open the first order. That's it - further trading will only bring you profit! We did not make a reservation - yes, on the news, and only profit! How this is done in reality - will be described in the following articles.
Stay tuned for updates on the AvtoForex.ru website!
P. S. For the convenience of opening two orders with a safe entry into a Forex transaction, you can use - the advisor will open two orders with one click with the same stop-loss and different take-profit. In addition, the Expert Advisor can be used to automatically calculate order parameters to accelerate the deposit.
19.02.2018
Whichever trader you ask, he will answer that he knows how to find points of entry into the market. Only practice will show how right he is. It happens that a quick glance at the trend and a couple of minutes of thought is enough for one player to search for entry points. Another, armed with a mass of graphical instruments, measures the price, studies bars, and monitors indicators. There are traders who simply burst into the market with their “gut instinct”, relying on the magic of this very “gut”.
How to enter the market in a meaningful and reasoned manner? We will consider, in a way, "Top-7" effective, but enough simple ways search for points of entry into the market. These are the best techniques, well-worked out in a practical way, with a solid baggage of victories. They are ideal even in situations where experienced traders have doubts about their decisions about the opportunity to open a position. Note also that the search techniques described here work for all types of markets - stock, futures, and financial.
Forex Academy traders are familiar with all methods of successful market entry and exit. We will be happy to share our knowledge with you in the format of an individual online lesson.
In a range with marks from the last high to the first Fibonacci lines, according to the last completed downward movement of the price, one can exit with a buy from the support line. The price moves upward in a zigzag manner - this is due to the confrontation between "bulls" and "bears". In an uptrend, bulls dominate the attack, but strong bears build their defenses.
The peaks of their confrontation on the chart are represented by the highs and lows of the price. "Bears" are trying to reduce the price to the level of the penultimate high point. On a strong trend, the depth of the price fall can be 23% or 38% (less often) from the last price level, which completely completed its downward movement. In these zones, you should look for points of entry into the market.
Buy entry from the support level.
4. Entry from resistance at Fibonacci levels
The situation here is absolutely mirrored in comparison with the one that has just been considered. The entry point lies from the resistance line between the first Fibonacci levels of the last completed upward price movement and the last low.
Sell entry from the resistance level.
5. Entry point for Buy on the countertrend
On the confirmed upper breakout of the trend, from its new support line, we look for entry points - you can buy. In practice, you can often see how the price breaks the upper level from the bottom up in a downtrend. After some hesitation at the top, it rolls down to the level, and then bounces up again, turning resistance into support. These fluctuations are taken into account by the counter-trend trading strategy.
We buy in a countertrend. Fibo levels can also be used here to determine the depth of the price correction and confirm the true breakout of the trend. At the truly broken up resistance of the creeping trend, there is a point of entry into the market. It lies above the breakout level at the place of the second price touchdown.
Entry on the breakdown of the resistance line and trend change.
Let the downtrend of the trend continue, at this entry the trader will receive his profit points for a short or long position. Correct entry points and reliable profit guarantee a successful trade. If there are graphical figures of technical analysis in the main trend, then the profit must be accurately calculated. Correct entry entering the market is only half the battle. For a complete victory, the deal still needs to be closed in time.
6. Entry point for Sell on a countertrend
If we looked for the entry point in the previous description on a downtrend, then here we are considering an uptrend. We are waiting for the price to break through the support level, its modification into the resistance line and the second touch of the price to it.
Entry on the breakout of the support line and trend change.
It is imperative to wait for the confirmation of the true breakout. You should not look for an entry point on a false breakout of support. Opening a long Sell position from the resistance line (former support in an uptrend) is the right decision. This method of entering the market is considered by professional traders to be the simplest, most reliable and effective. There is an opportunity here to take a rather advantageous position with the future of a good profit.
7. Entry on flat
Sideways trend movement is not the best backdrop for long positions and breakout strategies. You should look for entry points on a flat near the middle line of its price corridor. You can select your profits in flat for short and medium-term deals.
Forex Academy recommends that you familiarize yourself with the "Sniper" trading strategy. Based on supply and demand levels, it will consistently work in your favor with a focus on your bottom line.
The entire base of indicators can be roughly divided into 2 categories of instruments:
- Auxiliary. They do not show entry points, but describe the general state and trend of the trend development.
- Algorithmic. With their help, you can get clear signals to enter the market. They indicate entry points, but they should be regarded as a prerequisite for entry. The trader here must decide for himself exactly where the entry point for opening a position lies.
A lot of trading systems and algorithms are built on their basis. The system is the better, the more confirmations there are on its signal.
Summing up
To make a profit on Forex, you must not only understand what position you are going to open, but also be able to enter the market with your trade at the right point. Many traders are left with a small profit on a profitable trade just because they misidentified the entry point. In exceptional cases, this error threatens to disrupt the drain of the deposit. At the service of the trader - various tools and trading systems... But the most effective tool is his knowledge and ability to think and analyze.
Every trader knows that the key to a profitable deal is the right moment to open a position. How to learn to find entry and exit points? In what direction should you open trades in order to make a profit? We analyze all the nuances in this article.
What are Forex entry points and where to look for them
Competent determination of the moment of entering the market is the dream of any speculator. Before moving on to the analysis of methods and examples, let's understand the basic concepts.
Entry points are indications on the chart that provide clues as to when to enter a trade and when not. Your income is directly related to the correct definition of such moments. The market situation allows you to determine the optimal period and make money on it. This is possible by analyzing charts and making predictions. It happens that the decision needs to be made instantly, and sometimes it takes weeks to open a deal. Everything here is individual and depends on the personal trading style and the chosen strategy.
How to find Forex points
Let's deal with the main question of traders - how to determine the right time and find points. Search rules:
These simple tricks will help you develop a profitable algorithm. Just do not break it, do not give in to emotions and observe money management.
Point determination methods
The methods for choosing the moment can be different. Traders work with patterns Japanese candles, different indicators, lines and figures. There are both simpler approaches and more complex ones. They will vary depending on:
- Timeframe;
- Traded asset;
- Strategies;
- Personal preference.
For example, you are a risky person and love fast trading. Then your tactic is most likely scalping. There will be their own laws for detecting points. But if you are a long-term investor who has chosen the style of trading over longer periods, the points will be completely different. Let's take a closer look at some of the options.
Trending directions
Trading with a trend is the most profitable in the market. There are bullish and bearish.
Bullish - ascending, it is plotted according to the two nearest min, through which the straight line passes. The brighter and more obvious the lows, the longer the trend's lifetime. The timeframe indicates the strength of the trend. The longer the period of time, the stronger the developing trend in the market. In such a situation, the player receives a sell signal.
Bearish - downtrend. It is characterized by a continuous decline in prices and a sequence of three low lows and lower max. On the charts, bearish direction is a straight line connecting successive highs and a sell signal. To confirm the breakdown, indicate minimum percentage price changes. The rallies in the chart approaching the bearish line are a good opportunity to open trade positions in the direction of the main current trend. The bear market is developing a profit-taking area for short-term swing traders.
Trend points
All forex signals can be divided into two categories:
- An entry signal can be detected and processed - a trending approach. Those. the buy is closed after a sell signal is received, and a short position is set before the creation of a trade to increase the price of the asset.
- Moments of entry and exit to Forex depend on trends, but are formed after a rollback.
One of the trend-based methods is to track the movement of the chart on different timeframes. A longer time frame indicates the direction of the price. Then, of course, you can study the smaller time intervals. If the directions of the larger and smaller time intervals coincide, the entry point will be at the beginning of their joint movement. A well-known example of this phenomenon is ““. This strategy includes three timeframe charts and their analyzes. In this case, the low, current and high triframes are displayed. At the low point, a trade is opened for an uptrend. For a downtrend - at the maximum point.
Trading in channels
You can search for entry points in. You can read how to build a corridor correctly on our website. You need to build support and resistance lines and look for moments for deals near these levels. Open BUY positions at the lower line, and SELL at the upper one. You can also use the breakout of the corridor.
Forex reversals
Not a bad way to enter the market at the time of a trend reversal. It can be determined even visually or using special trend indicators.
If we are dealing with a reversal that has purely technical reasons (remember. One of them says that history always repeats itself), then special indicators will show us the entry points.
But there are situations when the reversal occurs suddenly. This can be caused by various fundamental aspects (news, political events, etc.). In this case, it is worthwhile to estimate the number of points during a rollback. And if the rollback has grown, then open positions in its direction.
News and Events
Economic constitute the basis. And as noted above, they have an impressive influence on the direction of the price. You can independently study and build analytics, or you can use special news indicators.
When the chart reacts sharply to some information, open a position in accordance with the trend (bullish or bearish). But this approach requires experience and, often, intuition. The quotes reaction does not always behave exactly as speculators expected. There are many examples in history when investors earned impressive sums due to fundamental aspects. Remember the legendary Soros? But an ordinary or novice player is unlikely to be able to instantly determine future perspective based on fundamental analysis. Therefore, it is still better for beginners to turn to other tools.
Point indicators
Using the tools of your trading terminal You can receive. They can be built-in (standard) or installed, paid and free. Your task is to choose from all the variety those with which you are comfortable working. Here are just a few of the possible:
- « Moving Averages"Or" moving average ". Show abrupt changes in movement foreign exchange market... Moving Average - the average price for a period of time at the time of opening and (or) closing positions.
- Bollinger Bands". They are represented by three moving averages, one is the main one, and two are biased. The upper and lower reference points indicate the price that is inside the axis.
- . It clearly gives signals, which are indicated by arrows, and calculates the level of placing stop loss and take profit.
In fact, there are a lot of indicators. And the choice will only be yours.
All the methods mentioned in the article are only part of the whole variety. But using this information, you can receive reliable signals and trade with profit. Nobody can give you a 100% guarantee that the situation will work out the way you expected. And all the signals are just hints. The market is an unpredictable environment that is influenced by many factors. But a competent approach still allows you to make more positive deals than negative ones.
We can talk for a long time about the role of psychology in trading, but the experience of many traders shows that Forex entry and exit points much more important than emotional experiences and attitudes. In other words, if a trader has a system with clearly formalized rules, he acts in a balanced manner and does not fuss about any reason.
In general, the point of entry and exit to Forex is understood as the part of the chart where the trader opens or closes a deal.
It sounds simple, but when it comes to identifying these signals in real time, a beginner often starts to panic and do something that he would never have done on a demo account.
Let's start with the fact that all forex signals can be roughly divided into three large groups, in particular, the first category includes entry / exit points identified by a reversing system.
A reversal system is a trend approach in which a buy is closed after a sell signal is received, and a short position is fixed immediately before the formation of a trade to increase the price of an asset.
Thus, entry and exit points to Forex directly depend on the quality of trends, so all efforts must be concentrated on studying the relevant systems and indicators, which I have already talked about many times in.
For example, this tactic does not work well on EURUSD, AUDNZD, USDCHF and other “flat” pairs, but on AUDUSD, USDCAD and USDJPY, it can quickly increase (overclock) the deposit.
Entry and exit points to Forex from the second category are also based on trends, but they are formed not at a break in the movement, but after a rollback.
Above, I gave a classic example of such a strategy on the four-hour USDJP chart. For example, here the trend is recognized using the moving average, and the buy / sell entry point appears only after the stochastic lines cross below / above the 50th level.
As for the exit point from the deal, for its formation it is necessary to wait for the moment when the oscillator lines reach the level of 75 (for purchases) or 25 (for sales), after which they cross in the counter-trend direction.
Perhaps this is not the most best example, since the profit received in 8 years will not seem satisfactory to all readers, but the principle, I think, is clear.
Be that as it may, hundreds of similar systems can be invented, so I recommend experimenting and looking for a suitable option for yourself, since a lot of free training material has been written.
Entry and Exit Points in Forex Flat
And the last large group of strategies unites all flat techniques, within which the entry and exit points on Forex are formed near the "sideways" borders. For a better understanding of what has been written, we will again turn to an example.
In this case, we are dealing with a pair of AUDNZD. As you can see, in a flat state, the stochastic oscillator identifies entry points quite well, so the trader has only one problem to solve - to learn how to break market phases into trends and sideways.
In my opinion, the easiest way to do this is with or.
Given this circumstance, it would be reasonable to pay attention to more reliable (and, as a consequence, complex) approaches to trading, among which they occupy a special place.
In this context, Forex entry and exit points are of two types:
- On the breakout of the key mark;
- To rebound from a strong level.
I advise beginners to trade exclusively "breakouts", since it is quite easy to recognize them, the main thing is to be patient and wait for the moment when one of the candles completely closes above / below the tested mark.
With the “pullback” trading, everything is much more complicated, since in this case we do not receive an obvious confirmation signal.
In addition, Price Action systems sometimes find no less interesting points of entry and exit to Forex and, therefore, I recommend reading the relevant reviews.
And the last thing I would like to draw your attention to is the stop losses and take profits. Unfortunately, many newbies perceive these orders in the abstract, i.e. as an element of the "game", although they are also full-fledged exit points from a position, namely:
- Take profit is placed at the level, after reaching which the probability of continuing the previous movement is 50/50;
- Stop-loss is placed on such a level, the breakout of which cancels the previous scenario / signal.
Thus, in order to learn how to correctly set goals and protective orders, you first have to perfectly master the rest of the theory. In part, it is for this reason that I put special emphasis on reverse techniques, because they can be applied without the indicators just listed.
In today's article I will tell you how you can effectively enter the Forex market, namely, I will give 7 proven entry methods that really work. They are quite simple and can be used by absolutely all traders, and at the same time are considered the most in better ways... It is these methods that always give excellent results, while other proven ones fold and give false signals to enter the market. It was these methods that were selected by studying different ways entering the market, moreover, exactly the correct ways of entering. By the way, Forex entry points, which I will talk about below, work great on different types markets: Forex, futures market, stock market. However, I want to note that no matter how much you trust any of the methods described below, still never forget about protective orders.
Trading in a trend
Many people think that the Forex entry point when they trade in a trend is very obvious and very easy to define. And, of course, all traders know the old adage: "A trend is a trader's friend." But if we enter the market when the trend is just emerging and when it is still not strong enough, then this can subsequently bring us losses. It is especially difficult for conservative traders who get used to the current situation and do not want to see or simply do not see the impending changes in the market. The reason, as always, lies in the presence of a psychological barrier.
As a rule, traders think like this: if the trend is established and it is downtrend, then after it starts to go up, many simply do not believe that the trend has changed the direction of its movement, so they continue to sell. The same thing happens when the trend goes up, and then there is a slight pullback. Everyone thinks that this is just a temporary phenomenon, so they continue to buy assets. This is where the main reason traders go long at the top and short at the bottom of the market lies. By the way, interesting observations about the middle of the trend. During this time, many investors relax as the accumulated profits allow them to behave more confidently.
That is, the main problem the fact that the Forex entry point for many traders simply does not coincide with the rhythm of the market. And pay attention to the moment that in this case we are not considering cases when a rapid growth of trading begins during the inception of a trend. In this case, we are more interested in how to behave within the trend. And in this case, trend lines come to our aid, which are built on the basis of carefully constructed support and resistance lines, which, in turn, are built on the basis of completed movements. As you can see, it is these points that I have cited above that are important levels that make it possible to enter the market with a high probability of making a profit, and at the same time with a small amount of risk. As a rule, in all these cases it is imperative to apply protective orders.
Point 1
We can enter a long position at the point where the price touches the uptrend line for the third time. Typically, an uptrend can be identified in the market when we see an increase in prices. At the same time, when we draw, we can identify an uptrend by drawing an inclined line. The slope should be upward. The line should be drawn at two consecutive higher candlestick highs. The most verified moment of entering the market is when the price touches the trend line for the third time. It is at this point that you need to enter the market. Open a long position. Pay attention to figure 1.
In fig. 1 shows well how an uptrend developed in the market. True, it failed to develop properly, so the close was above the trend. This, in turn, means that the trend is confirmed and will continue. Those who had not yet managed to enter the market on the first day still had a chance to enter the growing market by opening a long position. True, the effect would have been much less.
But when using this technique, you should still find out in advance the price levels that may vary. It all depends on when exactly the price will come into contact with the trend. I think the best option is to use the daily chart, moreover, it is advisable to use your own price level... If more verified information is needed, then for these purposes, you can use smaller time formats for market assessment. For example, 30 minute or hourly charts. In this case, an important role is played by software that we use for trading. Bad software can play a cruel joke on a trader. It will trite to let you down at a crucial moment - it will give an incorrect assessment of the current situation on the market.
True, this technique also has its pitfalls. Namely, false punctures often occur when the price only creates the appearance of a breakthrough through the trend line, but in fact these are only test breakouts. True, in the early stages it is very difficult to determine whether a breakout is true or not. To do this, you need to wait until the candlestick, on which the breakout occurred, closes and until the next candlestick starts trading. By the way, again let us turn your attention to Figure 1.
It clearly shows how the price punctured the trend line, but in the end, the close made it clear that in the future there will still be a bullish play. It always turns out that if the trend is strong, then sooner or later the price will return to it. It is for this reason that a situation often occurs in the market when the price at which the market closes is on the trend line.
At the same time, the likelihood that the Forex entry point will be correct increases significantly. And even if there is a breakout, the price will still fluctuate around this point for a certain time. By the way, when there is a strong downward price movement in the market against the existing uptrend, this does not always mean that the trend is changing. It's just that often at this time the bulls take a waiting position. They are confident in their abilities and are in no hurry to start the game.
Point 2
This is where we will enter the market when the price touches a downtrend for the third time. If you look from a different angle of view, you can see that this point is a mirror image of the situation that was observed at point 1. It turns out that both the trader's action pattern and the market entry point should be mirror-opposite than those that were in point 1. That is, we need to sell assets when the price touches the downward trend for the third time. Moreover, you need to be able to determine the presence of a trend. For this, a line is drawn along two successively declining price peaks, which have already been built by the market.
It is clear that it is not possible to say exactly the Forex entry point, because this value is constantly changing as the market develops, it becomes higher and lower. Of course, it is better to use shorter time frames such as daily charts. In addition, hourly and half-hour charts have worked well. But it is always worth remembering that you can only find out if the puncture is true or false only after the next candle closes.
Breakout trading
The ability to correctly identify the breakout points has always been highly appreciated by traders, since this knowledge allowed them to receive very high returns. Often many people think that a breakout trading strategy is a well-placed stop loss order that is triggered immediately after a breakout and thus enables the trader to immediately take a very advantageous position at the very inception of momentum. And I do not want to convince you otherwise. Of course, protective orders work great. The problem is simply that protective orders are not always practical and do not work in all types of markets. In the sense that different returns are obtained from their use. But when it comes to breakout limit orders, this is a great opportunity to make big profits with little risk. Everything that I will describe in this article is very suitable for trading breakouts. True, it is advisable to act not immediately after the breakout, but during the subsequent correction.
Point 3
Here we will open a long position from support in the area between the penultimate high and the first of the last downward movement. In the Forex market, you can often observe that when the trend is growing, the price slowly creeps up in a zigzag manner. Fierce bear resistance is seen in the first third of the uptrend. In this case, the price moves up, and the bears knock it down, because they still have sufficient strength.
Therefore, the result is a zigzag upward movement, because the price periodically falls. True, it should be borne in mind that the market is not the place where everything flows and changes very slowly. It is for this reason that sometimes prices simply cannot find support, due to which prices fall even further. In the event that the trend is strong enough, then the depth of decline will rarely be more than 23% or 38% level last move which was down and which has already ended.
Note that this particular area, which is capped by the penultimate high and the 38% completed down move that was the last, is a great place to buy. Figure 2 shows how the Forex entry point is searched for in order to make a purchase.
Figure 2 shows that the most profitable decision would be to buy in the area between the high of 1 and the 23.6% level from the 1-2 move. Also, focus on the 38.6% movement level 1-3 from top 1, which has similar data to the 23.6% level 1-2 from top 1. In this case, the lines 1-2 or 1-3, which, in principle, , are similar, are considered as a completed movement. Segment 2-4 is a completed upward movement, while segment 4 and down in the direction of the arrow is an unfinished downward movement.
Point 4
Here, a short position is opened in the area between the penultimate bottom and the first Fib levels of upward movement. Here the situation is somewhat similar, because, as in the case of points 1 and 2, point 4 is a mirror image of point 3, which performs the task of directing us to trade on a short position at a time when the market is correcting upwards. In order to determine when the market is going to fall, you need to know some specifics. In particular, a breakout can be identified when the price breaks above levels that have already been reached at previous price lows.
It is not uncommon for a market situation when, with an emerging downtrend, the market recovery raises the price bar to the support line, and punctures often occur. It is in this place that you need to sell assets. In this case, an important role is played by the area of resistance, which must be able to determine. Fibonacci levels will help us with this. Of these, I would recommend using 38% levels for this purpose. In addition, in some cases the level of 23.6% also works well, which will tell us that there is uncertainty in the market and that it is already ready to go down.
Pay attention to figure 3. It shows very well how to apply in practice all the rules that I talked about above. Namely: level A is calculated at the base of point 1; level B - 23.6% of line 1-2 and, in turn, level C - 38.6% of line 1-2.
Figure 3 shows that there is a sale in the area denoted between bottom 1 and 38% of movement 1-2. This area chosen because it is considered the most correct one to open a short position. Line 1-2 is considered the last upward price move. Segment 2-3 is considered a completed downward movement, and from point 3 in the direction of point 4, the line is considered an unfinished upward movement.
Point 5
In this case, we need to open a long position from the counter-trend, which is at the same time a downtrend. Such actions become very practical if the price of an asset passes it from the bottom up, and the closing is gradually fixed on the time scale that was chosen above the trend line. As a rule, the action pattern in this case is standard: as a rule, the price goes and goes through the trend line, after which it fixes, and then, when a correction occurs, the price drops back to the trend line. And now it turns out that a support level is formed on the trend line, which was previously in the role of resistance. It is at this level that the Forex entry point is located, which can be considered the most profitable (Figure 4).
Figure 4 shows how to open a long position from downtrend, which, after the price passed through it, became a support line. And even though the market went down after a while, the trader would still be able to make a certain amount of profit in a 300-point movement in the euro.
Of course, it is always advisable to get additional confirmation of all your actions. In this case, this additional confirmation can be obtained by determining the correction depth using Fibonacci levels. By using this technique, we can also filter out all false movements that only create the appearance of a trend formation, and understand whether in this case it is worth opening a long position from the trend line, or to wait and see what happens next.
Point 6
In this case, we will sell from the counter trend. Opening a long position from a countertrend, which was previously positioned as an uptrend, and at the same time played the role of a support level, and after the price broke through this level, it automatically became a resistance level - this is a very correct and reasonable move. This method is used by many professionals, since it is considered one of the most reliable and correct ways to take an advantageous position (Figure 5).
Figure 5 shows how to sell from an uptrend when prices break down, after which it becomes a resistance level. If it closes twice at the trend level, then this may once again signal that opening a short position was justified. After that, after a while the market still went up, but the trader already had the opportunity to make a good profit in the 400-point movement on the franc.
And again, Fibonacci levels come to our aid in order to determine the truth of the breakout. In the event that an uptrend has become a resistance line, and there are correction levels in the immediate vicinity of it, then the likelihood that you will receive a tangible profit increases significantly. And even if we entered the market incorrectly, we still have the opportunity to exit the market without losses. This is possible due to the peculiarity that the market rotates around the breakout point for some time. And only after a while, when he (the market) decides where to move on, there will be further movement.
Sideways trading
Many traders believe that trading when the market is in sideways movement is very unpredictable and dangerous. Hence the reluctance to trade in a sideways trend. Breakout strategies are not applied here, or they are applied, but they work very poorly. And because of this, trading develops according to the following scenario: after the trader places protective orders, and after that the price goes in the direction we need for some time, but after a while it reverses, and the trader suffers losses as a result of such a turn. And it is impossible to act in such a way as to buy at the bottom of the trading range and sell in the upper area. Or it is possible, but only a few do it. It is all the fault of a great psychological stress, because you have to trade against the established directional movement. But even in spite of this, there is still one method by which you can successfully trade in the corridor, which has already clearly defined its trading boundaries. Moreover, this trick can be applied both in the futures market and in the stock market and the Forex market.
This trick is based on the belief that when the market crosses the middle of the designated trading range, the price continues to move in the chosen direction with a vengeance. Conversely, if the market falls below the middle of the trading range, then this will indicate that the strength of the bears has prevailed, and then the market will fall. Knowing this feature, many traders trade in a sideways trend in the short and medium term. Moreover, they trade successfully.
Point 7
In this case, our entry point into the Forex market will be the mid-range area. The rules that we will apply in this case are as follows: if the market rises above the middle of the last completed market movement... To enter a short position when the market falls below the middle of the last completed market movement. But it should be noted that this technique is suitable only for those who practice trading on short-term time intervals. For example, if you try this strategy on time frames over several days, it will not work. As a rule, the strategy is suitable if you trade within a day, or no more than 2-3 days. But, despite this, the analysis should be carried out on different charts: daily and weekly.
When identifying in the market a 50% border, either one or two consecutively formed last completed movements of a market instrument, problems usually do not arise. The only thing that is not clear is: "How can you receive confirmation?" It would be a pity, but you can hardly get a clear answer to this question. The point is that the border area never understands how events will develop in the future. That is, there are no signs that would clearly indicate how events will develop in the future. And at the same time, the market looks as if it is ready to move in any direction. That is why the only way to understand the mood of the market will be to analyze its behavior during the passage of the area that shares the opposing interests. In addition, at this point, we will also be able to understand how the market sentiment changes when the critical area is passed. But it is worth noting that the market opportunities will allow us to make a detailed analysis, even without the help of displaying prices on a chart. Exit from the market using this method is quite reasonable and logical. The identified trading area will tell us the point of exit from the Forex market. If we consider other options, the exit may be near the Fibonacci levels. It all depends on how we are set to make a profit. Figure 6 illustrates this point well.
Figure 6 shows how long positions are opened when the price rises above the middle of the formed range, and how short positions are opened when a market instrument falls below the same level. It was at these moments that the trader had an excellent opportunity to profitably enter the market. The market has risen more than once from the middle by 10-12%, and has also fallen from it, and even by a rather significant amount. Profit taking took place at the borders of the trading range.
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