Check 5 things BEFORE entering a trade (Price Action Trading Strategy)

stop before you take that trade check for these five things [Music] firstly you identify the market structure you must identify the trend Direction it's only three types of thread right your uptrend downtrend and your sideways which is of consolidation it's really just as simple as that these are the only three type of Trends these are the only three ways where the market can miss it cannot move anything else so in an uptrend just like this price would be making your higher Heights and higher lows higher highs and higher lows so in this case you want to be trading with the trend trading the overall trend not against the trend so in the uptrend you should be looking to buy and in a downtrend just like this where price is making your lower highs and lower lows you should be looking to cell and when price is consolidating or going sideways just like this you can either buy or sell but I personally stay out of the market when price is consolidating because I've learned the lesson the hard way and of course it's not always going to be this clear to identify the trend because there are times where it is quite tricky and it's quite hard to identify the trend right just like this example right here price went down and then reverse and hit up and now it's just like going sideways and going consolidating like this so what you do in this case what is the overall trend here what should you do should enter for a buy or should enter for sale let me bless you with some wisdom when in doubt just zoom out so right now we are confused we don't know whether we should win for a buy or going for ourselves because it's just confusing right so what you want to do is to zoom out so that we can look at the bigger picture and buy some Me Out means that we are going to go up to a higher time frame so right now we're on the four hour time frame and if we zoom out let's go to the Daily time frame and now do you guys see the trend now we can see that it's clearance day is actually a downtrend so this is the overall downtrend and like I said we want to trade with the trend so in this scenario we should be looking to sell and the reason why we zoom out to the higher time frame trend is because you must remember the higher time frame Trend which is the longer term Trend will always always be stronger than the shorter term Trend the smaller time frame Trend like the 50 minute the one hour Trend right so the daily timeframe trend is always going to be much stronger than the 15 minute time frame Trend there will be times where the market is even more confusing and you won't be able to identify the trend clearly in that case my honest advice to you would be just stay out of the market no one is forcing you to trade the last thing you have to do is to force trades because when you fall straight you start trading those setups where you shouldn't be trading you will lose money next you cannot enter for a cell randomly just because you see that price is in a downtrend because look at this example right here if you end up or sell like somewhere right around this area just because you see price has been heading down and then the next thing you know price pull back and should back up and you lose a whole lot of money that is why you need to wait for price to reach an aerial of value which is the second thing that you must look out for before entering for a trade so examples of area of value are things like your support and resistance levels your supply and demand zones your trend lines your moving averages all of these are examples of areas of values where you want to enter for the trade so basically you want to wait for price to get to any one of these A1 of value then you can consider entering for the trade so in this example we see that prices fit in a downtrend and you can see that there is a little support level being formed right here so in this case there's a support level right here and right now price is in the middle of nowhere and remember we do not want to be trading when price is in the middle of nowhere we want to wait for price to get to an able of value before entering for the trade so in this case price is somewhere right around here so we still wait and wait and wait and wait until right here this is when price get down to the able of value but do we enter here immediately no which is going to bring me to the next step but before we move on to the next step I want to show you more examples of this area of value here's another example this time we have a beautiful handsome trend line right here so in this case price has just been bouncing off this trend line one time two times three times right this is not the best trend line but just do with it all right and now we are waiting for price to come down to this trend line so that we can enter for a buy so that we can push the price all the way up here right like that is a profit so right now what we're going to do is to wait for price to come back down to our beautiful trend line right here somewhere right around here then that is when we can enter for the trade so this is when price got down to our beautiful trend line which act as our area of value so this is where we can under for the trade somewhere right around this area of value not here not here but at an area of value so another thing that you can use to find out your area of value is your moving averages so right here we have total of the 50 moving average this yellow line you can see right here that is the 50 moving average and this is our area of value so we do not want to enter for a cell when price is in middle of nowhere like this wanna wait for price to get up to this yellow line this area of value this moving average and then enter for ourselves enter out and therefore sell whenever price bounces off the moving average not when price in the middle of nowhere like this the third thing you must look out for is your entry trigger when price reaches an area of value you cannot I repeat you cannot enter immediately when price at the area of value you must wait for some sort of confirmation because there is a chance that this right here is a fake out all right and if you enter immediately you are going to lose a lot of money so you won't wait for price to show you some sort of confirmation which is called your entry trigger so this entry Trigger or Confluence whatever you like to call it will literally signal to you that hey bro it is time to buy so that is when you can finally execute the trade so examples of conferences are things like your break of structure break of trend line or Candlestick patterns all of these things act as your confluences that you should look out for before you enter for the trade here's an example in this case we have identified our area of value which is this support level right here and right now price in the middle of nowhere so we want to wait for price to come back down to this AOL to show us some sort of confirmation for us to enter for the trade so we still wait and see right now prices came back all the way down to our area of value but we cannot remember you can cannot I repeat you cannot enter immediately when price is at this support level at this area of value you must wait for price to show you some sort of confirmation before you enter for the trade show you a entry trigger so it still Waits and waits and writer right here at this point of time we see a big juicy green Candlestick right here what is this this is the bullish engulfing Candlestick how do we know that you can see this Candlestick is so much bigger than all the previous candlesticks right here and it's literally like engulfing them so this is the confirmation for us to enter for buy so I would have entered for a buy somewhere right around here when I see this Candlestick being formed at this support level and look at what happens next price literally shot all the way up here making this a very successful trade here's another example you can see right here price in the middle of nowhere so we do not want to enter right we want to wait for price to come back all the way up to our area of Confluence and an area of value which in this case is our 50 moving average that we have drawn right here so price went up to this 50 moving average at this whole time it got rejected back down and then it went back up again to retest this area and head back down so at this point of time what chart pattern is this this is our double top chart pattern where price rejected this area of value not once but twice so we can enter for ourselves somewhere right around here and as you can see if you enter for South when this double top is formed price literally went all the way down back here the first thing you must check is news you must check news before you enter for a trade if you want to avoid any unpleasant move in the market so what I personally do is that before I end up for the trade I will go on to this website and call Forex Factory and check if there's any news that's coming out on that day I'm not gonna teach you how to use Forex Factory because you should already know that but basically you want to check for any news that is going to come out on that day right so example today is October 14th and there's a news that's going to come out at 8 30 a.m and it's going to be a car retail sales right and this is the high impact news how do we know that because there's a red folder right here so when news come out price is going to move up and down like super duper fast I'm talking like price can move up 100 Pips in one minute which is freaking crazy right so if you are on the wrong side of the move you're gonna lose a lot of money which is why you must check for news before you end up for a trade just imagine you enter for a buy somewhere right around here and then the next thing you know some news come out and push the price all the way down 100 Pips and if you did not use a stop loss You're Gonna Lose a ton of money so the question that I get a lot is should I trade the news a lot of you guys have always been wondering should you be trading the new and my advice to you would be do not trade the news trading the news is like gambling because there is so many like uncertainty when you are trading the news the news can be good news but price can still go down so if you are beginner please do not trade the news if you are like a complete newbie who know nothing about the economy and know nothing about fundamental analysis do not trade the news all right it is just pure gambling yes you can make a lot of money very very fast but you can also lose a lot of money very very fast the fifth step is that you want to plan your exit it is very important to plan your exit because once you get into the trade once you enter for the trade you must know when to get out of the trade because if you don't know that you are going to like see your profit goes into a loss so there are two types of exits that you must plan firstly where should you exit if you are wrong and secondly where should you exit if you are correct if you are right so this is what we call your take profit right this is your take profit and then this is your stop loss so stop loss is basically a level where you know if price hits your stop loss your broker will just get you out of the trade and you just cut your loss early and take profit is like the opposite it's like when price will just take profit your broker will automatically get you off the trade and you end up with a little profits firstly let's talk about stop loss you should place your stop loss at a level where it will invalidate your setup so that when price reaches that level you know that the trade is not going in a way so you just cut their loss early let me give you an example let's say the price is in an uptrend so it's creating a higher highs and higher lows higher highs and higher lows but then at some point of time price failed to create a new higher low so it come all the way down and break through the previous higher load which is right here so this is what we call a break of structure so in this case if you enter for a buy light somewhere right around here you could have placed a stop loss right here so that you know that when price break through the last higher low guess what you just cut the loss early and you can see like the Traders go against you so you cut your loss early and just get out with like a small loss and then for the tech profit you want to place a take profit at where price loss stop ads basically at the next key level or at a swing high or swing low so let me give an example so let's say there's like a little resistance area right here and then you end up for a buy like somewhere right around here and then you see price going up so in this case your take profit should be at this resistance level right here that should be your take profit because this is where price last stop at and this is like a key level so this is where you should place your take profit don't worry if all of this seems quite confusing to you because I'm going to show you an example I'm gonna give you a step-by-step guide on how you can apply all these things that I just taught you now let's hop on to the charts remember the first thing before we do anything is that we want to identify Market structure whether identify the overall trend Direction so that we can trade with the trend so in this case price in a downtrend right price just going down like this that is the first point so we should be looking to sell right because prices in downtrend and we want to trade with the trade and so should be looking to sell but should we end up ourselves right here hell no we cannot end up for ourselves right here randomly in the middle of nowhere remember the next step is that we want to wait for price to get to an area of value before we enter for ourselves so at this point of time I don't see any area of value so we still wait and you can see like right here price is giving us like Little Resistance area right here because when Road price get up here it always Rejects and head back down come back up here back down come back up hit back down right so price is just rejecting this area of value this little resistance area right here now remember when price reaches and touches the area of value like this you cannot enter immediately because there's a chance that this is a fake out you want to wait for confirmation you want to wait for your entry trigger to be formed then that is when you can enter for the trade so this amount of time I still wait for my confirmation right here you can see like price gave us a huge red Candlestick right here this is the bearish engulfing Candlestick which tells us that price is going to go down it's just rejecting this resistance area right here so at this point of time I will have entered for a cell somewhere right around here hold up no you cannot enter for sale yet remember what's our fourth step is to check for news go to Forex Factory and check for news so for this example let's say we've gone to Forex Factory and there is no news right there is no news that's gonna coming out today so you know what we have cleared this step there is no news so we do have to worry about the news when we can proceed with our entry so I will enter for ourselves somewhere right around here when I see this giant red camera stick this bearish engulfing Candlestick at this resistance level at this area of value so just to give you a recap the overtrend direction was downtrend so we should be looking to sell that is why we are entering for ourselves right now second thing is that you want to look for area of value and we have found our area value which is this resistance a with right here and that is your entry trigger which is this engulfing Candlestick right here which show us that there is a lot of selling pressure pushing the price down so when the cell right here and next step is that you want to plan for your exits right once you get in of the trade you must learn when to get out of the trade so at this point of time I'll place my stop loss at a level where you know that the price reaches that level the trade is not going in your way so in this case I'll place my stop loss Above This resistance area right here this area Value Place it above it a few above it and I'll place my take profit at the next key level and where's the next key level which could be somewhere right around here there's a little support level right here right here and place my take profit all the way down here somewhere right around here like this and obviously we are on the daily time frame so the stop loss is quite wide but if you go to the 50 minute time frame for your entry which is what I usually do you'll still also probably be like somewhere right around here only like so this would be like I'm much better entry so please do not enter on The Daily time frame I'm just showing you on this example right here to save time but basically most of the time I'm going to be entering the trade on either the 50 minute or the one hour time frame and if you do it in that case you have entered for the trade somewhere right around here so yeah once again the reason why I place my stop bus Above This resistance area is also because that this is a last lower high you can see price has been making your lower highs and lower lows in a downtrend and this is your last lower high so if price goes up like this that means that this is no longer downtrend and price is going to reverse and hit back up just like this and then we base our take profit all the way down at the next key support level right here because whenever price gets down here it always reverse and hit back up reverse and hit back up one time two time so let's look at how this beautiful trade plays out okay you can see right here price went down and smashed our take profit and it's really really just as simple as that if you can look out for these five things before you end up for the trade you will make so much more money just trust me you'll make so much more money so go ahead and try out for yourself and if you love this price action strategy check out this video right here because if you can combine this strategy that I just showed you with this video right here you're gonna be like undefeatable man so check out this video to find out more and remember you're just one trade away

Channel: The Trading Geek

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Keywords: forex trading, learn to trade, forex markets, rayner teo, tradingwithrayner, twr, price action trading, price action trading system, price action trading live, price action trading strategies forex, price action trading strategies, price action, price action trading forex, 5 things to look for before you place a trade, 5 things to look for you place a trade, the trading geek, trading geek, price action trading strategy

Id: K9aSGVU9BfA

Length: 18min 20sec (1100 seconds)

Published: Sat Oct 22 2022