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Precision trading - techniques facilitating entry into the transaction
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Precision trading - techniques facilitating entry into the transaction

created Paweł AdamczykApril 25 2019

One of the key aspects of good and profitable trading is a skillful "entry" into a given transaction. Of course, there will be opinions that the moment of entry is not as important as running a position and getting out of it at the right moment, but actually it is the moment of entry, often determines what ratio of profit to risk we finally achieve on a given transaction. Many traders seem to ignore this aspect in their trade claiming that entry is his "easiest" element. In this article we will answer the question, what gives us such a style of trade, and we will present some techniques that can facilitate good and profitable entry into the position. 

Be sure to read: A series of trading losses - how to deal with it?

The advantages of "being" precise

Why is it so important in which place we open a given transaction? The main plus as we mentioned earlier is that by paying attention to the inputs, we increase significantly the potential profit / risk ratio. If we approach trading seriously, it should be a key aspect for us. Maintaining this dependence at a good level, eg 3: 1 or higher, means that in the long term, even a series of several lossy transactions will not drastically reduce our account. Not only that, if someone pays attention to the inputs, sometimes even one good transaction with a good coefficient, can proverbially "do" the statistics of the whole month. Another undoubted benefit of precise inputs is the fact that using the approach in everyday trading, we can significantly better to place our stop loss orders. In practice, during strong moves, this can often prevent us from "catching" our order by the market.

Techniques to facilitate precise inputs 

1. Do not just focus on "out of hand" orders

Many traders very often the majority of their transactions should be called directly, completely omitting pending orders in their trade. This type of orders can be a great method for more precise entry, hence better R: R, and more refined stop loss. In my experience, buy limit and sell limit orders work best in practice. The buy limit is nothing but a purchase position, but only after the price has dropped to the right level. Similarly sell limit is a sales item, but only after the price has risen to the appropriate level. The main advantage of such a trade is that you enter the market at the price you previously selected. These types of orders are also great in typical medium-term trade. The main downside may be the fact that the market does not always go back to a given level. In practice, the fact that any transaction has been omitted is of no importance, it is better to bet on quality than quantity (by the way we avoid overtrading).

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2. Set orders at the end of the day / after closing the candle

Analyzing the market at the end of the day, or at lower time intervals after closing a given candle, very often allows you to set the transaction much more precisely. The main reason for this is the fact that at the end of the day the market is usually calmer, we avoid some kind of noise, which is often visible at lower time intervals. Day candles are a very good market filter, they also contain all macro data from a given day, they are a kind of image of the whole session. If you are a trader who prefers a daytrading approach, you can also successfully apply the method, focus on the analysis of candles at the key levels for you.

3. Use confluence (confirmation of several signals)

You should always use techniques that best suit our trading style. Of course, it's also easy to overdo it and go the other way, using too many confirmations. Practice takes on experience, there is no golden mean, you should analyze the market with the techniques in which we feel best. I use simple, but effective in my trade method of connecting zones with the trend. The first step is to determine the trend, I conclude transactions consistent only with the current direction. The second step is to identify key zones on a given market. If a candle appears in a given zone, signaling traffic in accordance with a specific trend, this is the perfect signal for me.

Podsumowując:

  • specify the trend,
  • set key levels,
  • look for confirmation in the techniques you use on a daily basis.
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About the Author
Paweł Adamczyk
A graduate of the University of Economics in Katowice. Since her student days, passionate about the currency market, stock exchange, and broadly understood investments. An active trader on the Forex market since the 2013 year. In making everyday investment decisions, in the first place puts the key aspect of the market, the price. A fan of motorization, travel and extreme sports.