Hello and welcome to another edition of the bulls vs the bears. Today we are going to find out how to find the best trade entry for maximum profits. Basically we are looking for lower risk and higher reward. Ask most people what their ideal low low risk and high reward is and they’ll say”A massive stop loss and massive profits.” But then somebody will retort saying”Yea. That’s easy for you to say.”
Sure these sublime trade situations are hard to find. They are like shooting stars. You find them today , and that’s it. But I’m hear to tell you that it’s possible to spot these sublime sightings. You just need to do a little digging. So without wasting much time, I’m going to show you two ways you can spot the best trade entry. And then I’ll show you a few illustrations of how to spot these trades.
Look For Obvious Price Signals
Look Obvious price signals. These signals should so obvious that you can’t miss them. T Most will tell you that the best time frame to spot these price signals is the daily chart frame. Because that is where all the excitement is. Do this over and over again, and you will get the hang of it.
Look for Factors of Confluence That Confirm The Price Signal
The next step is to look for factors of confluence that confirm the price signal. Basically you spot the signal, and then go back to another time frame and check to see if the signal aligns with other key levels or has formed thanks to a pullback within a trend, or that there is another factor of confluence in the chart.
Basically you want to find as much supporting evidence if you want to find the perfect trading point. Because the last thing you want to o do is to increase the risk:reward potential just to satisfy your restless urge. Just stay within your trading plan and you should be good to go. Like I said last time, greed kills.
I will let you in on a little secret. You may not find the perfect entry out there, but you can definitely find trades that carry a lot of confluence(or weight) behind them.
Now that we’ve gotten the meat out of the way, Let’s get into some examples
First is a clear example of a pin bar sell signal at the line of resistance. Pay close attention to the way the pin bar’s tail sticks out at the top. This obviously suggests a major price reversal, and it also tells you that price might be dropping pretty soon. This is pretty obvious it’s ridiculous.
Now next look at the illustration of confluence in the next pic
Right in front of us are three factors of confluence ina EURAUD graphic. This was a consequence of two zones acting as both support and resistance. If you ask me they give enough grounds to warrant a trade entry. Once again, see the way pin bar tail jut out at each of the three zones. That’s because of major pullbacks in each of the three areas.
Now these price signals are so obvious you can miss them. And when you get the entry right, expect to see a spectacular downward slalom run, as is the case at the line of resistance. See the way the bears just barge through the resistance barrier like it’s stolen something from them. And when that happens it can only mean one thing – humongous profits.
Now let’s look at another example illustrating an entry tweak and potential risk rewards
Ladies and gentlemen, we are going to look try to tweak our entry and improve on the risk reward potential on the trade. It’s going to be tough entering on the 50% retrace as price has barely touched the the first level of support at the bottom. The good news is you can still enter on the retrace of the pin(as indicated by the red arrow on the “Buy Entry”) and place your stop above the pin high(as indicated by the red diagonal line). Do this and you have yourself a strong stop loss and a decent profit.
We can see the same pattern at the RR2(Risk Reward) level. Stop loss is placed above the pin bar and entry is made just around the the third line of support. This sets the stage for a huge profit binge.
Finally let’s look at a bearish pin bar illustration whose profit potential is not so obvious
Here you see a long – tailed pin bar followed by a strong bearish pattern. These bars formed after price broke and closed under this level previously. Now it wont be so obvious since they don’t immediately scream “SELL US.” But the strong momentum behind the sell off should pretty much tell you it’s time to put in your sell order.
That’s a wrap for “How To Find The Best Trade Entry For Maximum Profits.” The main thing you should take away from this lesson the best trades form, backed by supporting factors better known as factors of confluence. With a little practice and knowledge of what you are looking for, this will be a cake walk for you.
Just look out for an intersection of a signal and a key level. Or it could even be the intersection of a key level and a trend. Just trade like a sharp shooter and wait for the right pieces to fit. Once the flash bulb in your head goes off, just pull the trigger and enter your trade.
Til next time take care.
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