http://www.netpicks.com/tjgiveaway1 - YOUR FREE TRADING SYSTEM Imagine for a moment that you have plotted out a trading zone on your chart and that is the area you will need to see price visit before entering a position. Maybe it’s a confluence of factors such as price pivots, a moving average, measured pullback via Fibonacci and a round number. What do you need next? You need something called a trade trigger to get you into the position. http://www.netpicks.com/look-before-you-leap/ - READ MORE

1. Trade Triggers & The Importance Of Trade Entry
http://www.netpicks.com/look-before-you-leap/

2. Imagine for a moment that you have
plotted out a trading zone on your chart
and that is the area you will need to see
price visit before entering a position.
Maybe it's a confluence of factors such as
price pivots, a moving average, measured
pullback via Fibonacci and a round number.
What do you need next?

3. You need something called a trade
trigger to get you into the position.
When price gets to an area of interest,
you don't simply jump into a position
without some type of sign that the
price is moving in your direction.

4. Looking at this next chart, we have a confluence
of technical factors that include:
A. Former resistance area broken & is
a Fibonacci cluster zone
B. Pivot level plus large momentum
C. Pullback to a moving average
D. Not seen but also a '50 level

6. If you were just waiting for price to
enter your confluence zone to enter
the trade and not a trade trigger, you
can see you were taken out with
momentum

7. Another positive about waiting for a
trade trigger is you won't just "jump
in" to a large bear or bull candle by
letting emotions take over. Not only
can these candles signify an temporary
exhaustion in the move but you can
also get some large slippage as you
market entry into the trade.

8. If emotionally entering a trade
because you see a large candle (yes,
people do that), then you clearly don't
have a trading plan and first order of
business: Get a trading plan!

10. So we need some type of trade trigger
to get us into the trade in an objective
manner that shows, at least at the
point of trigger, that price is in our
direction.

11. I am going to look at three methods to
enter your trade and for all the
examples, I am going to use the same
chart as the last one you just saw.
These may not be how the textbooks
describe them but often times there is
a large discrepancy between trading
books and in the field usage.

12. I am a fan of market structure in
trading and not only can it signify
areas of interest but also are valuable
for trade entries.

13. Understand that price moves in waves
and in our sample chart, our uptrend
needs higher highs and higher lows to
remain intact. A down trend would
need lower highs and lower lows to
stay intact

14. It would make sense to use the last
swing high as a reference point to
enter the trade. One price breaches
the high after price hits your zone, you
could enter the trade.

16. The issue now becomes position size
and risk because it is a large distance
between our zone and the high of the
last swing.

17. There is a trade-off between
confirmation of the move and your
stop placement which could leave you
with a trade with a very small position
size if you are using a % of account risk
method.

18. You can see however that there was
not a trade trigger and you would not
have suffered a loss on this trade.

19. A very objective method of trade
triggers is using an indicator cross or
turn to alert you to entering the trade.
How close you are entering at the turn
will depend on the indicator and
setting you are using.

20. This is a 14 period CCI that we can use
for a trade trigger. There are a few
methods you can use to give yourself
an objective trade entry when price
enters your trading zone.

21. 1. This is where the long shadow
shows up and drawing a simple trend
line on the highs of the down slopping
CCI does not give you a trend line
break and therefore no trade.

22. 2. Price gives a slight bounce off the
zero line but price never makes it high
enough to trigger a trade

23. Waiting for a simple CCI signal would
have prevented you from entering a
trade after a tempting reversal candle
at your trading zone of interest.

24. To add a little more confirmation, you
may want to place a buy or sell stop a
few ticks/pips off the low/high of the
candles that turns the CCI. This will
ensure actual price movement is in
your direction although the breach of
a high or low of a single candle does
not hold much significance.

25. Trend lines are used by many traders
to help define trend direction and
even trend strength through the use of
fanning trend lines. The way you use
them to define the main trend is also
how you can use them to show a break
of the counter trend move or
retracement.

26. The chart we have been using makes it
difficult to use a trend line at this point
because you want to connect swings
and there are no swings to speak of at
this point.

28. There is another way to draw trend
lines and that is simply having the line
hug the shadows or extreme of the
body candle range.

29. The black trend line is an example of
just connecting the upper shadows
and entering the trade on a strong
break of the line.

30. The solid red trend line is plotting off
the highs and the dashed red is an
attempt to join the high with a sloppy
swing high.
Regardless of the reds you used, there
was not a trigger when price entered
the trading zone.

31. Nothing is guaranteed but having an
objective means to enter a trade keeps
all emotions out the trading equation
and that is a huge step for many
traders.

32. When trend lines break, there is often
a retest of the lines and that can cause
many traders to panic out.

33. Support/resistance can be arbitrary
and often times we will see price test
(break the high), fail, and then drop
after you are in the trade.

34. CCI is one step removed from current
price as it needs price to calculate.

35. In the end, what really matters is that
whatever you use is something you are
comfortable with and will be
consistent with. There are many ways
to swim a river and the same is true
for trading: There is no one right way
to trade.

36. This objective way to enter trades
takes emotions out of the equation
and further cements an objective
trading style where your rules do what
they are designed to do.