Did you ever skip or miss a trade setup even when price went into your zone of interest?
Unfortunately, it happens too regularly: traders hunt for a trade with a clear trading plan in mind, but once the market actually reaches those levels they fail to execute (and get frustrated later on if the setup goes their way).
Of course, anyone can miss a trade setup due to practical issues and timing. When a trader wants to take a market order, there is always a risk of not looking at the charts when a trade setup actually develops.
My main point is that traders must always be aware of their trigger. You need to establish at what point will the trade be taken and after what sequence of events. Otherwise, you will make yourself nervous and will either enter a trade:
- Too soon: not willing to miss a trade at any cost
- Too late: too cautious with entering
- or not at all: too scared to push the button
GBPUSD TRADE SETUP
The GBPUSD is a perfect example. The GBPUSD broke the support trend line (orange) with a strong bearish daily candle in a strong downtrend with clear bearish momentum. When we keep trading simple, it is easy to recognize that the trade setup with the most potential is a short.
In this case the classical break, pullback and continuation pattern seems the most probable. To measure the pullback and discount, I placed a Fibonacci tool on the daily chart. Any of the Fib levels could in fact be worth taking a trade with a stop loss above the high of the big bearish candle. But the very best Fib levels are the 50 and the 61.8 because there is extra confluence in this area, which is the broken support line now becoming potential resistance.
MAIN IDEA: TRIGGER
As price actually reaches the zone of interest, many traders get into emotional storms that disturb their balance. The best solution is to identify a clear trigger for entering the trade, and once it shows up take the trade without hesitation.
Here are the 3 rules for what you want to keep an eye on:
- Define exactly what you must see on the chart before trading it (trigger);
- Do not stare at the chart and look at each small increment of price change, which will make every trader nervous and jump into any trade;
- When the trigger occurs (1st point), take the entry without hesitation. It is too late to second guess the setup as you have done all of the analysis beforehand plus it is possible to have a perfect trading scorecard.
TRIGGER FOR THE GBPUSD
The previous daily candle closed bullish with a strong close as well (close near the high of the day). I am therefore not taking the short right now but waiting for a price action confirmation on the 4-hour chart. When reviewing the 4-hour chart, I can see a couple of 4-hour candles having wicks and a small rising wedge (blue lines) appear. The candles are already showing signs of struggle. My trigger for the GBPUSD is the first bearish 4-hour candle with a stop loss 25 pips above the most recent candle high and a target at the most recent bottom of 1.4950.
Once in the trade, nerves might hit you again but you are not the only who has that. Check out this funny video. 🙂
Do you have the same experiences?
Do you think defining the trigger clearly could help?
Thanks for sharing and wish you Happy Hunting!
Winner’s Edge Trading, as seen on: