Hello traders! In my last Lessons from the Pros article, we discussed the tendency of many new traders to “chase” trades, that is enter well after the optimal entry level. This week I’d like to expand on a slightly different way to enter your trade.
You may have heard the old trading phrase that goes something like “entering your entire position at one time is the height of arrogance.” What this basically means is that no one is good enough at trading to buy the absolute bottom in price to go long or the absolute top when going short, at least not consistently! The theory is then that you should scale in to the trade, adding to it as long as your original analysis is still valid. This idea of scaling in or adding to a position does not mean you get to blindly add to a losing position until it finally goes your direction; this is one of the most basic fundamental mistakes that blow up people’s trading accounts! What I am referring to is the pre-planned adding to a position at or near a high quality demand or supply zone. When we say pre-planned, what are we planning? Our total risk in dollars.
In this GBPUSD chart, I’ve identified an upward sloping trendline that intersects a high quality demand zone. Using the entry styles that we cover in our Online Trading Academy classes and in our… Continue Reading
