Correct way to enter a trade
So we have all seen my analysis on GBPUSD short. We could see on the 4hour chart that the break short happened, then the retrace to which we enter short for the big move short. The question is, how do we enter the trade safely?
So when the retrace was approaching the resistance level the key thing to do is to switch to the 15 minute time frame. What we want to see is the trend revers on the 15 minute through confirmation of breaking short.
As you can see on my chart, the price action on the 15 minute, broke through the support at point A making a lower low. then it retraced to test the previous support as the new resistance at point B. This is when we enter the trade as this is now a lower high.
This means we have had a lower low and a lower high signifying a change in trend.
Next is the stop loss. As seen on the chart at 13037, the SL needs to be placed at the previous high. If the price action goes past this previous high then is will be a higher high meaning the trend is not reversing and that the trade has no confirmation and is invalid.
I hope this insight will help some of you in entering safely.
Happy Trading - The Trading Box.
So when the retrace was approaching the resistance level the key thing to do is to switch to the 15 minute time frame. What we want to see is the trend revers on the 15 minute through confirmation of breaking short.
As you can see on my chart, the price action on the 15 minute, broke through the support at point A making a lower low. then it retraced to test the previous support as the new resistance at point B. This is when we enter the trade as this is now a lower high.
This means we have had a lower low and a lower high signifying a change in trend.
Next is the stop loss. As seen on the chart at 13037, the SL needs to be placed at the previous high. If the price action goes past this previous high then is will be a higher high meaning the trend is not reversing and that the trade has no confirmation and is invalid.
I hope this insight will help some of you in entering safely.
Happy Trading - The Trading Box.
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