The Authority’ on Price Action Trading. In 2016, Nial won the Million Dollar Trader Competition. Nial and why should I use it? The main idea of this trick is that when you trade balance effect on forex a price action trade signal or a trend, you don’t just jump in right away at market price, instead you do what most of the other traders are not doing, you wait for a pullback, retrace or a rest in the market.
By waiting for a better entry, it allows you to get a tighter stop loss on a trade which in turn allows you to potentially make more profit on a trade by increasing your risk reward. By waiting for a more optimal, or conservative entry on a trade, we can decrease the probability of getting stopped out for a loss because our stop loss is placed in a safer location , thereby giving the trade more room to breathe. It can allow you to get a better stop placement as we talked about above, and if you just really want to be more conservative and let the market come to you on a trade, the trick gives you this option. Most of the time, a normal stop loss distance should be used as the market needs room to breathe. Tighter stops should only be used on setups you feel very confident about and ideally after you’ve gained some solid screen time and trading experience. When you have a strong view on a particular price action trade setup and you would like to get the best entry possible so that you can increase the potential profit on a trade, the trade entry trick is your most potent weapon. In the chart example below, we can see how the trade entry trick can increase the risk reward on a trade by allowing you to get a tighter stop loss and thus trade a larger position size.
Another excellent way to take advantage of the trade entry trick is using it to help you avoid getting stopped out on a trade before it moves in your favor. The net effect of this patience is allowing us to have more breathing room on a trade by shifting our stop loss further away. Now, let’s compare what happens when you use the trade trick entry to the normal entry in the chart above. Here’s another example from a pin bar signal that stopped many traders out in the Gold market back in early August of this year. This is much different than just jumping in right away on our first observation of a price action signal or market bias.
In the example chart below, we can see a recent pin bar in the GBPJPY on the daily chart time frame. Note that this was not exactly the best pin bar signal because it was a bit small and its tail didn’t really protrude out from the surrounding price action. Still, the underlying bias was bullish in this market and certainly longer-term there was a clear up trend. In a trending market, traders see the market moving aggressively up or down and often want to jump in a trade without waiting for a retrace.
It is usually this not waiting for a pullback to enter that often results in traders buying near the high or selling near the low. It is important to understand that every trader is different and different traders have their own motives for using different entry types. OK with that because they understand the importance of getting the best entry and how it can lessen the chance of a premature stop out. Also, it’s important to mention that a trader doesn’t always have to be uncertain or conservative in their view of a trade to enter on a retrace or pullback, this is just how some traders always trade and it’s part of their trading plan. It’s a tool to add to your trading toolbox, and a very effective one at that. Keep in mind that the way we trade at Learn To Trade The Market is unique and we must apply discretion to each signal, because trading can’t be mechanical if you want to stand the test of time.
Over time, after learning the approach and screen time, a trader will start to develop their own unique style and entry methodologies to extract as much profit from the market whilst risking the least amount possible. Thank you for another thought provoking and honest article. It’s refreshing how you reiterate that trading is subjective and all these tools and entry signals have to be considered within in that market condition. In your pin bar article you mention placing entry at the break of a pin bar then the stop one pip below the tail- this technique has saved me several times as my order has not been hit. My question when using this tecnique do you place the order the wrong side of the market? I enjoyed the read but after reading about pin bar.
Hi Jordan, I think we are also wasting time if we entry too earlier when after that price retracing, and we also loss opportunity to have lower risk. I think this entry super tuning technique is the deepest part of pa. Your course has lots of free treasures all over the place and this entry tick is one such. I like the approach but it would need emotional balance to wait for better entry. And I would like to know how can we control our emotion. Do you have any article on emotion control or psychology?