Trade Entry Techniques
Trade Entry Techniques, Most traders tend to concentrate on pinpointing the perfect entry for a trade. However, in reality the entry price is just one part of the equation. The common entry techniques are:
A trend trader will tend to use channel breakouts to enter trades in order to catch a trend when it is beginning. The general rule is to pick a period length, which could be 20 days for a long term trader or 15 minutes for a daytrader and buy if the high in that period is broken or sell if the low is broken.
Visual Entry based on patterns
The art of technical analysis focuses on the many types of chart patterns that markets tend to form. Such as gaps, spikes, inside days, outside days, triangles, flags and double tops to name a few. These entries are rather more subjective than channel breakouts.
Prediction techniques include Elliott Wave, Gann and Dow Theory. Again the actual entry price based on such theories is very subjective. Predictive techniques usually try to pin point major turning points in markets and are therefore attempting to go against the current trend rather than with it.
The theory behind a volatility breakout is that if the market makes a sudden move in a particular direction then it is likely to continue in that direction. The general rule is to add/subtract a pre-determined percentage of the recent average true range to the opening price thus giving buy and sell points.
Take the average price of the last x periods (minutes, hours or days) and buy if the price crosses above and sell if it crosses below. This technique works well in purely trending markets but will be badly whipsawed in a range bound market. Variations include using 2 or more moving averages and using the cross of those as a signal. The moving averages themselves could be simple or weighted (more emphasise on the latest prices).
Oscillators and Stochastics
I.e. RSI, stochastics, Williams %R etc. Generally these tools are used to determine whether the market is ‘overbought’ and ready to drop or ‘oversold’ and ready to rise. They work best in range bound markets by picking tops and bottoms but fail in a trending market.
Tim Wreford runs Online Futures Trading, a website that provides information and resources for traders. Tim also provides a free day trading system, the results of which are updated daily on the site.
If you’re not doing so well getting started in Forex, your frustration may cause you to wonder: “Is trading Forex for a living actually possible?” It’s a very valid question, and chances are that while you’re learning to trade Forex, the chances of you making a Forex trading income may seem very slim indeed. The good news is that it is indeed possible to make a Forex trading income that can replace your full time income. By the end of this article, you’ll know how to trade Forex for a living.
Is It Possible To Trade Forex For A Living?
Yes, it is, and I know a handful of traders that are doing very well trading Forex for a living. Some of them trade purely using automatic trading systems, while others trade manually using their own mental systems. How you choose to trade depends on your personal preference, but if trading Forex for a living is your goal, then you’ve got to make a very serious commitment to learning to trade Forex the right way.
It’s a sad fact that 95% of beginner Forex traders don’t survive their first year of trading. While there are many factors involved in their failure, the one common factor is that they don’t treat it as a Forex trading business. All successful businesses start out with a well thought out plan of action, sufficient capital and a proven process for producing profits. If you’re serious about trading Forex for a living, then need to get serious about your Forex trading business.
Creating A Forex Trading Business
The number one problem plaguing beginner Forex traders is a lack of capital. No one can turn $250 into $10,000 in a matter of years, let alone months, yet thousands of beginner Forex traders try to do it every single day. In trying to double and triple their money rapidly, they end up taking extreme risks in their trading, which leads to the inevitable blow-up of their trading account. No matter how profitable your trading system or strategy is, you will fail if you don’t start with enough capital and a very strict money management approach.
Having said that, you have no real Forex trading business unless you have a proven, profitable trading system that works consistently for the months and years to come. If you’re only just getting started in Forex, then the chances of you designing your own profitable trading system is very slim. It takes years to develop a proven, profitable trading system, so if you want to have a successful Forex trading business right now, then what you can do is to buy a system that has already been developed by a more experienced professional Forex trader.
Trading Forex for a living is not a myth. In fact, it is a very achievable goal for anyone who treats it as a Forex trading business. It doesn’t matter if you’re just getting started in Forex, or if you’ve been trading Forex for years without much success – if you’re willing to make a serious commitment to treat your Forex trading as a business, you’ll be well on your way to creating the Forex trading income you desire.
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