Three Steps to Locate Ideal Entry of the Market (Multi-Picture Analysis)

What is an ideal entry? Well, it should make stop-loss easier to be set with a good potential risk-reward ratio. Some people say it is difficult, but such an ideal entry is not impossible. You can also find such an ideal entry to create a better start for trading, if you know the method.

As for me, I always follow these three steps to find the perfect entrance:

• I usually look for obvious signals or patterns for price trends on the daily chart, because I personally prefer trading daily charts.
• Find the aggregation point information that can support these signals. A signal can be regarded as supportive information if it is consistent with other key price levels, retracements, etc.,

Follow the above two points, then try to improve the entry settings and increase the risk-reward ratio as much as possible.

Following are some examples:

 E.g.1

In the EURUSD daily chart below, there is a clear pin bar sell signal. Note that its shadow line is prominent, which means a large reversal, suggesting that the price may continue to fall in the next few days. This pin bar signal conforms to the "obvious" concept and can be seen at a glance:

In the figure below, let's find out what "evidence" is supporting this pin bar signal. Some information can serve as supportive message such as the market is in a downward trend for several months, the signal appears after the pullback near the resistance level, the signal itself is obvious, etc. Then set the transaction directly and wait for the market to trigger the setting:

Now let’s zoom in on this pin bar and adjust the entry position to see if it can improve the risk-reward ratio. It can be seen that if there is a relatively better return rate in the place where the pin bar is close to 50%. There may be changes in the actual transaction, so we need to flexibly set the entrance closer to this position. The approximate profit target is 3 to 4 times.

E.g.2

This example is the SPI 200 daily chart. The pin bar below is very obvious to be noticed.

Then switch to the weekly chart to see the signals above. If I find a trading opportunity in daily chart or 4-hour chart, I will identify if the signal is meaningful in larger time frame.

The pin bar in the above figure is formed near the strong resistance level of the weekly chart, and is confirmed to be consistent with the downward trend of the daily chart and the weekly chart:

Finally, let’s move back to daily chart. There is no resistance near the signal, but the transaction still has double potential profit. A signal formed in the key price range and coupled with a consistent trend is certainly a sign to trade, and could suggest a wave of rapid and strong price swings:

E.g.3

In this case we are looking at bearish signals. In the crude oil daily chart, a strong downtrend can be noticed. These bearish candlestick signals are formed and closed below the key resistance level after the price breakout. These signals may not be as obvious as the above example, but it is not difficult for experienced traders to find them:

Switch to the chart in a larger timeframe, and you can clearly see that the important price levels and trends above can support these signals:

It can be seen that you can get a good risk-reward ratio even if the stop-loss is set at the high of the first bearish candle bar, because the market is ready to take off, which is the type of market suitable for additional investment. It can bring huge profits with 5 times the profit of a single transaction:

Summary

I hope everyone notices the important concept that ideal trading usually has multiple supporting factors or information. Just like the examples above, in which the trends are obvious, and signals are also formed near key price levels. It should be put as identifying those is not difficult for people have been trading for a while, but to be proficient at doing one thing requires training, continuous practice and intuition. Traders should also be good "snipers". Under the premise of well preparing, choose those valuable transactions.