So, the first lesson to secure your trading entry point is to implement the fundamental analysis properly. It comes as a handy tool to foresee the future price direction. Besides, it helps to clarify if the move is going to suit the short-term or long-term strategy better when it comes to determining the best day trading entry point.
Ways to Enter a Trade
If you know how to use the fundamentals, you will benefit from multiple entry point tactics and techniques. Most of them are very likely to work well.
Support and Resistance Levels
Example: let's say, you need to specify specific price levels (also known as support and resistance levels) that will result in a certain market reaction. What would you do? You would probably use technical analysis to identify that level, which is actually your trading entry point.
Previous support and resistance levels show that the price is very likely to make the same moves. Moreover, there is a high possibility of expected market reaction to happen. This is how you can choose a specific way to enter a trade.
Price charts make it very easy to define the price levels. All you need is to learn how to read them. They deliver vital insights within a needed period. This fact ensures a more accurate forecast for a currency pair to change its direction, for example.
Price charts may help with no only support and resistance levels. They may come in handy when it comes to price levels ended in a fifty or double zero:
As you can see, here we have clearer price levels that can make a huge psychological influence on the financial market. As a rule, beginner traders tend to trade at clearer levels while something like 1.1343 may look a bit overwhelming, especially from the start.
Psychological levels are not the only ones to consider when finding Forex entry points. Other means may also appear to be pretty helpful. Technical indicators are certainly to consider, as they can be overlaid on basic price charts.
Traders may choose from a variety of indicators. However, you need to know how to use them. Otherwise, it will be nothing but a waste of time. It may result in delayed decision-making, which is inappropriate.
So, you should opt for all technical indicators you come across right at once. It is better to start with the most proven ones such as Fibonacci retracements and pivot point indicators. The key benefit here is that they mostly correspond to the price of a chosen trading instrument.
Here is how you may use those indicators:
- Read the price chart to indicate levels within a given timeframe. It may vary from 15 minutes to 4 hours.
- Specify the nearest fifty or double zero price level.
- Use the above-mentioned technical indicators to check the price level.
- Confirm the entry point with the indicators landed or overlapped to the original level.
The process works well to confirm the entry point and make it as secure as possible.
Note: make sure you leave enough room for the price to move by leaving a larger gap between the confirmed entry point and the current level.
A Winning Entry Point Strategy
To trade more consistently, you need to confirm each new entry point. Besides, you need to get used to trading at the optimum timeframe. Define the best day trading strategy that meets your techniques to make the most of the anticipated price movement.
The strategy refers to using confluence. It also helps to apply the stop loss properly, which works great especially for short-term traders. Keep in mind that price moves following specific conditions. It never runs occasionally. For this reason, having a tight stop loss will reduce exposure, making the entry point even more secure.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.