TRADING TECHNIQUES
Trading And Timing
Forex Entry
In the foreign exchange markets, where moves can be fast and substantial, timing is everything. This market timing entry setup can increase your chances of success.
As a retail trader, I believe there is less than a 50% chance of making money from trading without a technique to signal your entry into the market. Even if you are 90% sure of the direction, as soon as you place a position in the market and it goes against you, your emotions will overwhelm you. A potentially good trade can quickly turn into a loss because you can’t trust your emotions.
Chart trading, however, increases the odds if you work with some sort of technical setup — one that you feel comfortable with, one that you have backtested and are confident with. A good technique can increase the chances of your success by up to 80%.
Determine the opening range
One method for timing your market entries requires finding the opening range and marking the high and low on the short-term chart. You cannot change the time frame just so the method, which needs to be used consistently, fits the current market price action. You must remain with the setup.
Figure 1: eur/usd daily chart with volume. The chart depicts a bullish engulfing and spinning-top candlestick types. This signal is very important even to the short-term trader as it creates a bullish bias for the next session.
This technique can be used as an intraday technique that signals more trades per session or as an entry technique for a longer-term position. You must decide which time frame is right for you because it also requires you to be disciplined in your money management. Whether you are up to that challenge is something you will have to discover for yourself because the position size and duration of the trade will determine the criteria for your risk management.