Once we have analyzed a market and established the current market structure and trend, we take trades in the direction of the current trend. Any one of our entry reasons confirms a successful pull back into a mean value zone (dynamic support or resistance), and a trade can be taken.
Timeframes
We are using the H4 timeframe for our market structure analysis, and signals can be taken on either the H4 or H1 timeframe, depending on the entry reason.
Entry Setup
Our entry reasons for taking trades in each timeframe: Engulfing Candle, Kangaroo Tail, Flags, Pennants and breakouts from consolidation.
See the topic Entry Setups below for examples of our entry reasons.
The Entry
When making any kind of trading decision it is critical to wait for the bar/candle to close. A lot can change in the final seconds before the close and the setup might not be confirmed. Once the bar/candle closes, confirmation of our entry reason can be made and the trade entered. Often, the market will pull back and give an opportunity for a better entry. However, waiting for a better entry can cause you to enter at a worse price so be consistent in your approach to entry.
If the candle is larger than the current ATR (14) reading, then wait for a pull back to at least the ATR before entering. If the market has already moved far away from the level, don’t chase the trade as your first target will be farther away too. It is better to pass on the trade and look for another opportunity. Big bars do proceed big moves, so it will depend on the market condition whether you wait or jump into the trade beyond the ATR. Keep in mind your risk management when deciding whether to take a trade from a big bar.
Enter 2 positions for each trade. Both positions together should equal your total position size. Money Management will determine the position sizing for each trade. This will be discussed in detail later in the course.
Trader’s Mindset: Pro Trader Beliefs
- You don’t need to know what is going to happen next to make money.
- Anything can happen. Once you enter a trade you are no longer in control of where the price will go.
- Every moment is unique. The trade either works or it doesn’t.