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Professional Forex Traders – Entries or Exits?

21/1/2018

5 Comments

 
Picture
This is a bit like the chicken-and-the-egg question: which came first?  For traders of Forex and other instruments, what is the first thing you look for: a good entry or a good place to take profits? 

I’ll make an educated guess that the majority of retail traders, including readers of this blog post, look for good entries before considering anything else. That educated guess is formed from the number of requests I receive, asking for me to code indicators or robots using a combination of squiggly line indicators (like moving averages and oscillators). How many of you have toiled for weeks or months, or even years, trying different combinations and settings of indicators in the fruitless search for perfect trade entries?  You think you find the holy-grail of entries only to then see consolidation periods destroy your account … back to the drawing board you go. A recent request for a squiggly-line-combo system inspired the writing of this blog post, I wrote something similar a few years back.

Now for another educated guess: the majority of professional traders carefully consider where price might be going to, as well as where it might find resistance, long before they’re thinking about entries. Professional technical analysts will look at a confluence of factors: supply and demand, support and resistance, Fibonacci expansions and extensions, harmonic projections, etc.; and not forgetting eWaves target zones of course. The pro’ traders will have a pretty good idea of the price magnets and probable sticking points; on current and higher timeframes, before they’re ready to commit their funds to a trade (all this is explained in the Free Forex Trading Course).

You start a journey knowing where you are going to; you don’t just get in your car and drive, without a destination and plan for getting there (unless you’re just out for the fun of driving).

If you really must use your super-duper-magic-combination of squiggly line indicators for entering a trade, use them to get the best risk:reward entry to trade in the predetermined direction to a predetermined price level.  Don’t use them if you have no idea where price might be heading to.  You should never find yourself doing stop-and-reverse trades this way: the undisciplined trader’s approach to destroying accounts in double-quick time. You don’t change your mind on the direction of the market because one trade goes against you; if you do, then you seriously need to take a long hard look at the charts again, to see why your previous bias was so wrong and to qualify the new bias, before you place another trade.

Your take-profit levels should ideally be the strongest price magnets that offer the path of least resistance.  Once you have identified those levels, you can look for entries that offer an acceptable return on your risk: ideally more than 2 to 1, so you don’t have to be right more than 50% of the time, to make a nice profit in a month.

So what should come first (in a trader’s mind): the entry or the exit?  eWavesHarmonics provides for both. switch to a higher timeframe of your choice, make your own copies of the plotted levels, relatively near to the current price (add the word ‘KEEP’ to the object names, so the ‘Clean’ button doesn’t delete them), switch back to your preferred timeframe and plan your trades.

Trading doesn’t need to be a stressful random act.

5 Comments
Spyros
21/1/2018 11:52:58 am

Valuable information, as always. Your work and guidance has helped me become much more disciplined and successful than I was.

Reply
Steve
21/1/2018 11:54:52 am

Thanks Spyros - nice of you to say so.

Reply
AC
21/1/2018 12:17:15 pm

Great article again Steve.

Nothing worse than a trader having no map for where they think price is going and then thinking they're great when they stop and reverse for a win or taking plaudits for a win due to a gut feel...

Annoys the life out of me...

Thanks again mate

AC

Reply
Steve
21/1/2018 12:23:00 pm

Thanks AC - I know what you mean :)

Reply
MckinneyVia link
22/2/2022 05:45:36 am

What an exquisite article! Your post is very helpful right now. Thank you for sharing this informative one.

Reply

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  • Home
  • eWavesHarmonics
  • INDICATORS
    • MT4 Indicators
    • MT4 Free Indicators & Scripts
    • eWaves v1.0 Manual
    • MT5 Indicators
  • Trade Tools
    • Advanced Trade Manager
    • Advanced News Trader
    • Trade Copier
  • Trader Training
  • Harmonics
    • TheHarmonicIndi
    • TheHarmonicIndi Instructions
    • Harmonic Chart Pictures
    • Harmonic Patterns
  • Trading Blog
  • Contact Us
  • Who is Snorm
  • Q&A
  • Trading Services
  • Useful Links
  • MT4 TIPS and TRICKS
  • Newsletter
  • MetaTrader Wingdings
  • Fibonacci Numbers
  • Privacy Policy
  • Terms of Use and Disclaimer