Forex Trade Entry Points and Timing

More accurate forex trade entry points are possible using our trading system, along with timing the entry on the smaller time frames. If you have better timing of your trade entries on a consistent basis you will be well on your way to forex trading success, including better stop placement. This is the number one issue forex traders have. In this article we will examine how to verify any spot forex trade entry, and time the entry better using the smaller time frames.

Trade Entry Points, General Criteria

All forex trade entry points need some general criteria, then we can expand from there to using the lower time frames for better timing. General trade entry criteria include trading in the direction of the trends on the larger time frames, H4 or larger, and having a valid trading signal from The Forex Heatmap® to confirm the direction. Other general trade entry criteria and forex trading rules include a price breakout on a consolidation phase, no support or resistance nearby, depending on the direction of the trade. For example, on a buy trade entry, you would like to see at least 100 pips of potential before the next major resistance level is hit. On more volatile pairs, increase this to at least 200 pips of potential.

All traders should set up our free forex trend indicators and start to become proficient at using multiple time frame analysis as a first step. After you do this, you can conduct a daily market analysis and start to determine what pairs are trending, and on what time frame. Traders can also determine when the market or certain pairs are not trending or ranging, or possibly choppy. Daily market analysis also allows any forex trader to prepare written trading plans ahead of the main trading session, a huge advantage over almost all other forex traders. If you have a written trading plan in hand and you know the condition of the market across 28 pairs, that is an excellent starting point for assessing any trade entry risk, as well as market risk. You must know what pairs are trending on the larger time frames at all times. We recommend trading in the main forex trading session, which is the best time to trade the forex market, then after about 6 months of experience, traders can start trading at other times of the day like in the Asian session.

Role Of The Time Frames In Trade Entry Points

At Forexearlywarning we advise using multiple time frame analysis. Each time frame has a role. The larger time frames, H4 and larger are for general market condition, trends, strength or weakness, etc. The smaller time frames like the M5 and M15 should be used for timing your trade entry, along with strong signals from The Forex Heatmap®.

Forex Trade Entry Point Example

In the example discussed below, the general entry criteria should all be met first, now we can discuss more exact timing of the trade entry on the smaller time frames. Remember that the general criteria for a trade entry includes a consistent signal from The Forex Heatmap®, trading in the direction of the higher time frames, and no support or resistance nearby, depending on the direction of the trade.

Example buy signal on the Canadian Dollar (CAD). You check the heatmap and live currency alert system and you see when the CAD is strengthening on all pairs. The heatmap should have consistent signals like you see below. The CAD is strong on all pairs, 7 out of 7.

If the CAD/JPY is trending up on at least the H4 time frame, then you should consider a buy on this pair or possibly a sell on the USD/CAD. The next step is to determine the condition of the smaller time frames, like the M5 and M15, to time the entry. The M15 time frame is shown above. If the CAD is strong on all 7 pairs, then there is likely some JPY or USD weakness, which supports the stronger movement. When a currency is consistently strong or weak, the visual arrow system is very meaningful. As long as all pairs in the same currency group are moving in the same direction by at least 0.25%, a trade should be considered.

Now lets check the smaller time frames to time the entry point better. Look at the images of the smaller time frames below:

If the smaller time frames like the M5 and M15 are going sideways or retracing slightly, wait for the smaller time frames to turn up before entering the buy trade. If the smaller time frames are already pointing up and have been moving up for a while any buys should only be for half of the lots you want to buy, this is called "scaling in". Example: if it is your intention to buy 4 mini lots of the CAD/JPY or sell 4 mini lots of the USD/CAD, you could scale in 2 mini lots in this situation. If the smaller time frames are retracing and they turn to the upside, then you should enter a buy or sell on all 4 mini lots. If you scale in lots, you can continue to monitor the pair until you are able to scale in the rest of the lots you intend to buy. In other words, make sure the pair is moving up on the small time frames when you buy it, don't anticipate.

This example is for buying the CAD/JPY or selling the USD/CAD. This same logic works for all 28 pairs we trade in both directions for buys and sells. If you want to sell the CAD/JPY or buy the USD/CAD, the heatmap signals would be reversed and you would be trading in the direction of the larger time frames again. If the larger time frames are not trending in the direction of your trade, you are daytrading. Now that you have one good example of how to enter a good quality forex trade, you can review ten more example trade entries using our trading system.

A Powerful Chart Setup for Trade Entries

In the above example we are using one chart of the CAD/JPY for illustration. Howeve you can set up your charts with all of the CAD pairs grouped together on one screen for a powerful method of viewing the movement cycles. Check out our metatrader profiles chart setup for individual currencies. This chart setup can be used on the smaller time frames or larger time frames for 8 currencies and be ready to see more pips than any chart setup available to forex traders. We strongly advise setting up your charts this way.

Other Trade Entry Point Considerations

The criteria pointed out in this article for a good trade entry have been made as clear as possible, but there other trade entry criteria to consider. Things like setting and moving stops, pairs that might be ranging rather than trending, possibly trading on a lower time frame like the H1 time frame, intraday trading (day trading), trading in the main trading session versus trading at other times, trading ahead of or after strong news drivers on the world economic calendar. All of these other criteria for a good entry point are covered in detail in our training, specifically in the 35 forex lessons. We trust anyone looking to improve their trade entries will need review these resources carefully.

Demo Trading Assisting With Entry Points

We consider this article to be fairly detailed with regard to forex trade entry point criteria and timing entries, plus top notch chart setups. But traders must test these criteria by demo trading. If a trader refuses to demo trade the process cannot work because reading an article can only illustrate all of the principles. Traders must work hand in hand with the trading system provider to become successful via demo trading, and micro lot trading with stop orders. Your trading success depends on it.

Conclusions about forex trade entry points and timing entries: We have identified all of the general criteria for a trade entry, and added how to time the trades better with the smaller time frames. Combining this knowledge with some demo trading and micro lot trading and you will be well on your way to successful forex trading. All live forex trade entries have risk until you move your stop to break even. Using these techniques will ensure a much higher percentage of solid trade entries, and reduce the risk of any trade entry.