Types of entry in the marketsTypes of entry in the markets
1- Aggerasive entry for high rewards
2- Conservative entry
3- Highly confirmed entry
Entrysetup
Different Methods to Identify Perfect Entries with ConfluenceBasics of Trading and the areas of interest of every trader to have minimum knowledge to understand the market and its movement.
Volume Based Entries
Basics of Volume When the price is trending volume will be above volume moving average that will be considered as trend, when volume is too high in a session thats higher than 3x to volume moving average that will be considered as climax which means maximum orders are filled in the exsisting trend. Apart from stocks if such Climax pattern in volume in any format is seen then consider there might be a reversal soon. If one is trading in the stocks you get to see this ultra high volumes in gap ups and gap downs, now you will have to know what sort of gap it is to take entries which we will discuss in the Gaps later.
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Gaps
Gaps theory needs to be understood properly, over 4 kinds of Gaps are found in charts. Simple understanding follows :
Common Gaps : Normal gaps that happen every day with in a ranging market
Break Away Gaps : If a range/pattern/Support or Resistance is broken with a gap that is called break away gap. This sort of gap happens in the early stages of trend.
Running Gaps : After breakaway gaps rest of the gaps if happened towards the trend is called running gaps. as long as there is an exhaustion gap.
Exhaustion Gaps : This Exhaustion Gap happens either up or down after an up trend or the same in a down trend. These gaps gets filled giving an idea that the trend has ended.
Consolidation Areas
Consolidation areas or the trading ranges are to be considered as Support & Resistance areas to identify for patterns like Triangle, wedge, flag, pennant, or rectangle patterns. good areas to look for gap up or down and volume to identify breakout for the next move or plan for the next session.
Fib Extension & Retracements
Fibonacci extention and retracements is the basic knowledge that any trader who is willing to learn about technical analysis should be considering learning in depth, its a basic tool that gives you a lot of info, Basic knowledge to know is Fibbonacci Retracement is used to identify the entry and Extension is used to identify the exit. levels of interest are called the golden ratio i;e: 38%, 50%, 62% this is where majority of the reversals happen, these can be considered as Support & Resistance zones to look for breakout entries
Support & Resistance
Every traders nightmare is to understand or identify S&R in the initial days of your trading is not because you cannot ... it is because you are too curious, anxious, exited to enter into a trade, once you calm down and try to understand the market its not that hard to identify them ... S&R areas are the reversal zones or breakout zones it is going to be a big topic if tried to explain the whole concept so lets just stick to basics and use pivot high and low and FIB levels as your support and resistance zones for now.
Trendline Breakout
These are first thing that any trader learns try to master them, a perfect trendline is considered a strong support in uptrend or resistance in downtrend when it has respected this line for least 2 times from its start point. A breakout gives you and opportunity to enter in to a trade.
Elliott Wave
This is not considered as entry point in the initial stages of learning but one should know the basics of elliott wave to identify the trend we are in by looking at the leg we are in and you can calculate the trend by given wave length through fibonacci ratios. Only thing that you need to know is that market doesnt move in a straight line like you see in elliott wave picture above there will be waves with in waves.
Try to bring all these together as confluence to understand the market move and take entries.
Note : Train the eye to identify the structure, then comes the logic and explanation.
Entry Techniques : Ambush vs Retest vs ThresholdBackground: Kindly see my Asian Paint Short Trade Idea (Linked Below). Asian Paints was making Lower Lows and Lower Highs and was moving towards its long-term trendline. Hence, I was eyeing a short opportunity in this trade. However, my entry and exit were not great. So I have analyzed different entry techniques (credit to Franklin O. Ochoa - PivotBoss):
My Entry (@2395): My idea was that the trend line was already broken and I should enter the trade. Price reversed the next day to make one more lower high. But my entry was too soon and without any confirmation.
Ambush Entry: It is very Risky. The idea behind this technique in this context is that when the stock has broken the trendline it will go up again near the line joining the lower highs for a test. There a trigger order shall already be waiting for entry. It's risky because a trend reversal may also occur. this technique is to be used when we are absolutely sure about the levels.
Retest Entry: Moderately Risky and the best entry technique. Franklin says that how many times you have seen that the moment you have made an entry, the trade goes against you. The retest entry allows us to avoid this (mostly). The idea is that once we have identified the confirmation candle we place an order for the next day at (High+Low)/2 of the previous day (confirmation day). This would allow us to enter the trade at the wick of the candle (most of the time). This method is less risky and one of the best.
Threshold Entry: It has the lowest risk. The idea behind this is that once you have identified your confirmation candle you place a trigger order higher (or lower in case of a short trade) than the close price of the confirmation candle. This allows you to enter into the trade only if the price is moving in your direction.
Retest entry would have allowed us to enter the Asian Paints Short Trade at a price of 2440. The best thing about retest entry is that it allows us to enter a trade much lower to our stop loss which was 2500 for me in this case. Compare it with my entry. SL with my entry was 105 points away i.e Rs. 31500. But for a retest entry, the SL would have been only 60 points away i.e Rs. 18000. And in trading every rupee matters and every point counts.
Hope this doesn't seem boring :). Best of luck and happy trading.
