Identifying how to enter the market is only a part of the equation. Obviously, traders can’t make money if they won’t be involved. And this means that the entries must make sense. There is no ‘magic bullet’ in entries for trades, and there are things traders need to keep in mind when getting involved.
The Trend
An essential thing for an entry is understanding if traders are going with or against the trend. To explain further, if they’ve been rising this market for months, and traders are looking to buy the currency, then it indicates that they are trading the trend. On the other hand, if they have an entrance into the market that is a short position, they are going against the longer-term trend.
Generally, it is much wiser to enter with the longer-term trend, as big money will help gain faster than short-term speculators. If the chart has been rising for the past several years, buying is the intelligent thing to do.
The Moving Averages
Several people will use a particular moving averages situation to begin buying. For instance, trend traders often use a moving average crossover. They will wait for a smaller time frame moving average to cross over a longer timeframe moving average to start buying or vice versa.
One of the most typical ways traders employ this strategy is to buy a currency pair won the 50-day EMA crosses above the 200-day EMA and sells when it breaks to the downside. But, traders must also check that there is some type of momentum, and the market isn’t chopping sideways because that can cause many whipsaw trading.
The Candlestick Patterns
There are hundreds of candlestick patterns to choose from, but a handful of themes catch most traders’ attention. The most important one is probably going to be the hammer or shooting star, as it shows an entire reversal.
If traders can marry that up with a major resistance level or even some other system, then there are a few reasons to enter a trade.
The Fibonacci Retracement
A lot of traders are using Fibonacci retracement entries. The most usual are the 38.2{c115a04623437e90ea6238964e9ff60d47e74f870daa90f17e9ad1b90c2b400f} Fibonacci retracement, the 50{c115a04623437e90ea6238964e9ff60d47e74f870daa90f17e9ad1b90c2b400f} Fibonacci retracement, and the 61.8{c115a04623437e90ea6238964e9ff60d47e74f870daa90f17e9ad1b90c2b400f} Fibonacci retracement. This becomes interesting when there is a round number or previous support/resistance to back up a Fibonacci move too.
There might be nothing magical about Fibonacci when it comes to trading markets, but many people pay attention to it.
People will, most of the time, search for some type of candlestick pattern at one of those major Fibonacci retracement levels. After that, they will place their trade based on not only a supportive or resistance candlestick pattern but on the fact that a lot of people will be paying attention to these levels.
Conclusion
Trading and looking for a good entry can become challenging. But still, when traders place a trade, there is a specific amount of changes coming into play. The thing about trading is that traders must keep it simple. They must know exactly what is working for them and focus on those factors. And the best way to trade is to ensure that traders have some simple and easily identifiable reasons to enter the market.
