Home Trading Strategies 5 things You Must Look For For Before You Enter A Trade

5 things You Must Look For For Before You Enter A Trade

5 things You Must Look For For Before You Enter A Trade

Hey hey what’s up my friend so in today’s episode I want to talk about the five things the five things that I look for before I place a tree because I know trading it can be daunting especially those of you who are new to this business right you know is this the right time to enter the trade know when should I buy when should I sell you know am I too late to the party am I too early do I need to wait for more confirmation yah yah so these five things I will help you navigate the markets right and make you feel more confident right before you put on a trip the first thing that I look for is a market structure what do I mean by this so this simply means right I ask myself what is the current market structure is the market in an uptrend is it in a downtrend is it in the range so once I can define the current market structure that I know what to do if the market is in an uptrend I will look to either buy the dips or buy the breakouts if the market is in a downtrend Eller to sell the rallies or sell the breakdown if the market is in a range manner to sell that resistance or to buy its support that’s it right once you have defined the market structure then you know what you should be doing to be buying selling or what not number two I’ll ask myself where is the area of value so what I mean by this is for example the market can be in an uptrend but the price might be in no-man’s land right it could just be no break up to all-time highs and the price right now is in unchecked uncharted territory and at this point I don’t want to be buying because the price is not an area of value so how do you define an area of value well there are few ways to it you can define it using you know support resistance for example market is in an uptrend can wait for it to retest the previous resistance that could become support or you can wait for the price to retest a specific moving average to the market respects like the 50-day moving average or you could wait for it to retest the let’s say the trendline the upward trend line or whatsoever so this area of valley would vary depending on market conditions depending on how strong the train is how healthy it is or how weak the train is it so the second thing I look for is to see where the price is relative to the area of value if it’s far away from it I wouldn’t take the trip if the price is near an area of value that I want to be trading from then hey you know that gets my attention and this brings me to number three number three is the entry trigger what is that thing right now set up the pattern that will get me into a trade so the market could be in an uptrend then it come into an area of value may be in an area of you know previous resistance ten support and right now I’m waiting for an entry trigger to confirm my hypothesis to confirm that the buyers are about to step in and push the price higher so for entry trigger there are many variations again right many times – you can look for something as simple as candlestick patterns like a bullish hammer a bullish engulfing pattern you can look for an RSI crossing above 30 you could go down to a lower timeframe right and look for a break of structure looking for the price to make a series of higher highs and higher lows before you enter a trade those are all different ways right that you can use to enter trade those are different types of entry trigger that you can use and once I have a valid entry trigger the next thing I’ll do is my exits and my exits right can be broken down into two parts the exit when I am wrong meaning you know where will I exit a trade if I’m wrong and where will I exit the trade if I’m right so let’s talk about where will I exit the trade if I’m wrong otherwise known as your stop-loss so for me right a principle that I always follow is that I want to place my stop loss at a level where if the price reaches it it invalidates my trading setup so what does it mean right so let’s say I am looking to buy in an uptrend I’m looking to buy at an area of support in an uptrend so clearly my stop-loss got to be below that area of support right because if the price were to break below that area of support and hit my stop-loss then it clearly is telling me that that area of support is no longer holding so my stop-loss has to be at a level where if it’s rich I know support is broken I know that I want to get out of the trip okay so it doesn’t matter what trading setup you’re using you could be trading breakouts you could be trading reversal trading or whatsoever the concept applies the same your stop-loss must be at a level where if the price reaches it it invalidates your trading setup so let me give you an example let’s say you trade a Head & Shoulders pattern right here in Shoulders pattern so at what price point will the hit and Shoulders pattern be invalidated well if you know that a head and shoulders you have a left shoulder you have the head if the right shoulder so it would make sense that your stop-loss right as you go above the hip because if the price breaks below the neckline and then you reverse up higher and pick out the highest of the hit and clearly did hit Angela’s pattern doesn’t look like a hidden shoulders pattern anymore it looks like a weird up-and-down pattern okay so that’s what I mean by having your stop-loss right at a level that invalidates your trading setup and once we have defined that stop-loss once we have defined the exit when we are wrong then the next question is where do we exit if we are right if the market goes in our favor where do we exit the trick and this brings me right to the first part that I touch upon earlier the market structure all right I like to exit my trick based on the market structure I’m seeing so let me give you an example if I see a trend it’s in a strong trend right the prices you know being above I stay above the 20-day moving average for quite a long period of time and it’s still above it so it tells me that the strain is strong so let’s say I got it and a good entry price right for this type of market condition I want to trill my stop-loss because I have no idea how how far right this trend could go it could continue going for a next few days next few weeks and I want to write this trend because it’s strong because it’s strong and it’s relatively easy to hold this type of traits as the trend or just goes up higher day after day with little to no poo bags so for such market condition in a strong trending market I want to drill my stop-loss and right in the train and sometimes you might not be trading trends might be trading let’s say a range you know that the market is contained between the highs and the lows so if I let’s say I happen to buy and support in this case I want to sell my position right just before resistance because I know that there would be potential selling pressure looking at resistance so in this case if the market is in a range right I want to look to capture or swing in the market and what do look to capture a trend right because the odds are not quite with me because I have the X the resistors to break in a mug in the trend our higher odds are pretty slim so runner just capture a swing at the highs and exit the tree and another thing is that sometimes right you might have the anticipation right that the highs of the range will break up the price might no trend higher if that’s the case then what you can do is you can exit a certain amount of your position in the highest of the range and then right in the remaining half right to see if you can capture a trend if you don’t curse so there’s another way you can go about it right if you have some kind of a hunch or a feeling or a higher time from analysis that that tells you that you know the range is about to break out so that’s another thing that you can do alright so in essence right now five things I look for before I enter trade is very simple number one market structure number two area of value number three and three trigger number for your exits which deals with exits with your right and exit if when you’re wrong and if you boil it down right this is what I call the main formula M AED a formula so we then sit right I hope you got some value out of it I wish you good luck and good trading I will talk to you soon you


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