The Best Entry for Any Trade

The best entry is when you the market has already shows it's hand. There is no exception. The most profitable trades, with the quickest returns, occur when the market has CLEARLY SHOWN it's intention to move strongly.
You must be patient until all the signals must line up, then you pounce and you will feel calm beacause these are the trades that feel right. The trades that you can set and then walk away from the computer, feeling calm and good about it.

Reading the market and identifying these trades is easy when you know how. The objective of this article is to show you how to do this and set you up, so you can find your own big winners.

I will explain this principle with a Buy side trade, however the inverse is true for Selling.

Point 1 - "LOW"
We are at the lowest point in the price. Any buys here are highly speculative. There is no evidence yet that there is any reason for price to go up. Buying here is low odds gambling, reserved for the crazy or those with inside info.

RED leg to "2 - HIGH"
We've now made a new high in price - the market is showing signs that it is waking up.
Typically this is when a lot of newbies buy. They buy when they see new highs, they get excited and Fear Of Missing Out kicks in. To have really high odds of winning the trade, we need more information before we can commit, patience is key in achieving a high success rate in trading.

GREEN leg to "3 - HIGHER LOW"
Ok now we've got some great signs that the whole market sentiment is changing towards the bullish side. The Sellers who stepped in at Point 2 have failed to push the price below the LOW at 1. The move from point 2 to point 3 has concluded higher than Point 1 - this is called a Higher Low. The sellers have failed in their mission to push price down forcefully. This clearly communicates that the market sentiment is bullish and that says sellers are losing control, therefore buyers are in control.

PINK leg to "4 - HIGHER HIGH"
The buyers now really step in, taking out the HIGH at Point 2 (see Break to HH dashed line). We now have the full combination of signals that we look for, for ideal entry.

1. LOW
2. new HIGH
3. new HIGHER LOW
4. new HIGHER HIGH.

We then WAIT for retracement. At higher highs, price will retrace and when it does, we pounce. Here we see a bear candle with a big wick on the bottom of the candle. This says despite the candle closing (red) bearish, buyers were there. It is a very unconvincing Bear candle. The next candle is a green Pin candle with another wick, that failed to go lower than the wick of the previous Bear / red candle. This is our signal to enter.

STOP LOSS PLACEMENT:
Stop loss could go below the low of the Pin candle. This gives us the shortest possible distance between entry and stop loss, so will allow the maximum position size within our Risk allocation (position size is proportional to the distance between entry and stop loss when using a % of your account balance on each trade - more on this in another article later).

CONCLUSION
We can see what happened to price after all the above conditions lined up. We are reading the whole market from Left to Right and formulating a view on the sentiment of the market.

WHAT TO DO NEXT:
Start practising seeing the levels and writing the Points 1,2,3,4 as in that chart. Find other instruments that have behaved the same way and start trying to interpret where the sellers have stepped in and if they have achieved their objective or not.

Here are a few recent examples to get you started: