Hi all, My name is Lavanya from India.

A lot of people think just learning technical analysis is enough to start trading. But it's not true that before taking any new trade, whether it is stock or crypto, we must clear our set-up. Then it's only possible to close our trade with a profit, otherwise, the market books profit from us.

In today's post, I will discuss some key parts which we determine by ourselves before placing our trade. I hope it helps a lot in avoiding unnecessary losses.

Determine The Trend's Direction:-

First, check the price action charts in different time frames. Then draw some lines according to your understanding.

Then determine the market's moving direction, whether it is in an uptrend or downtrend.

Also, check the price actions and farm any candlestick pattern. Moving from support to resistance.

Is price action following Fibonacci levels?

Is price action forming higher highs or lower highs or lower lows?

If we clear those, then we can easily identify the present price action direction. Based on that, we can give our entries whether they are long or short.

Always trade concerning trends. Don't trade against the trend.

Follow the Trend

Before giving entry, first identify support, resistance levels, and trend direction.

Then decide whether we want to trade, trend continuation, or counter-trend.

_{Watch this Simple Video Made Using Whiteboard Animation}

You can decide what type of trade entry to give based on the price action and candlestick pattern.

Determine Entry Point

Identifying trends is easy, but determining our exact entry point is not so easy. Due to whales' manipulation in seeing sudden spicks in the market, we give our entry due to our emotions. But it finally ends with a loss.

In trading, we need to control our emotions and also need a lot of patience to determine our entry point.

In my opinion, always wait for the retracement point. Give entry there, it always gives profitable trades to us.

Determine Stop Loss Point

After giving entry must place Stop Loss Point, For placing an appropriate stop loss always respect the wicks. For short needs, consider the top of the wicks; for long needs, consider the below wicks. It helps a lot in determining the correct stop loss set-up point. Along with also considering Average True Range (ATR) for knowing stop loss points.

A stop-loss always helps us avoid further loss if there is any sudden market reversal.

Take Profit (TP)

Due to greediness, a lot of traders miss booking huge profits because of not placing Take Profit Point. When the market suddenly starts moving in the opposite direction, they close their trade with a loss.

That's why, until you get experience in trading, you should maintain a 1:1 risk-to-reward ratio for your trades.

This means that if you want a 1% profit, you should also be prepared to lose 1%. Once we reach the target point, we can maximise our profits by using trolling stop losses.

These are the most important parts that we must determine before placing any trade.

Thank you very much for reading my blog.