Forex Trading can be divided into two major components. Money management, which includes education, strategic planning and personal psychology is the first one, and entry and exit timing is the second.
Successful trade entries are made up of a few different factors and even when using excellent planning tactics, there are no guarantees. Timing your trade entry correctly can be the key to your Forex Trading success. It can also mitigate your risk. This requires extensive thought and planning as well as research.
First and foremost, when deciding what your entry point should be, you need a trigger. A planned point at which you will dive in, and what that trigger is may vary from trader to trader. Some believe the best time to enter the market is when there is a crossover in moving averages. Some might think the best time is when there is a reverse candlestick pattern happening. Regardless of what you decide your trigger is, decide on a trigger and stick to it. If your trigger point comes and you ignore it, then you can’t expect your trades to go as planned.
Make sure you are looking at the right charts. There might be a pattern that looks like your trigger but it is on the wrong chart. Your trigger must happen on the chart that matches up with your trading strategy.
Limit orders can get you better prices. A limit order means that you have a pending order either above or below market price depending on how you are trading. Long trading means you will place the limit order below the market price and if the price drops below that price you will buy. Short trading works the opposite way. You place your limit order above the market price and if the price goes higher you will sell your currency. Using these limit orders doesn’t guarantee you a trade but if you do enter the trade it will be at the right price for you.
Focus on your ideal entry point. Wait patiently for the easy targets to come to you rather than chase them. Its fine to you miss a trade because your target entry point was not attained. Some traders feel like a day where they did not enter a trade is a waste but more accurately, a day when you enter a trade at the wrong time is a bad trading day.
Waiting for your target entry point will give you some excellent benefits. When your stop loss is placed at a more conservative point, you are reducing the likelihood of being stopped out for a loss. You allow your trade a little bit more room to move and therefore can turn around the result and make a bigger profit. Waiting and carefully watching until your entry point finds you, can increase your profit, and make you a more successful trader even though it can mean that you miss some trades that you might have entered into without sticking to this plan.