This is a summary of what I look for before entering a trade, the process leading up to taking a position, and the key principles and precautions I value when trading.
TOC
Entry Process and What I Value in Trading
Entry Process
- Draw the overall wave structure on the chart and identify the market trend.
- Mark key price levels with horizontal lines, such as the low that led to the most recent high or previous highs.
- Perform this analysis from the higher timeframes downward.
- Identify which timeframe and price zone the current market is in.
- Decide on which timeframe you will trade, the range you will target, and in which direction.
- Create a clear scenario: “If the market does this, I will enter.”
- Confirm that the risk-reward ratio is not below 1.0.
- Determine your take profit and stop loss levels.
- Check currency strength/weakness.
- Calculate position size based on your acceptable loss.
- Wait patiently until your scenario plays out.
- Look for a trend reversal on the lower timeframe.
- Wait for the confirmation candle to close.
- Observe price action carefully.
- Enter the trade.
Important Principles and Things I Pay Attention To in Trading
What I Value in Trading
- Do not monitor profit or loss after entering a trade.
- Only pay attention to price movements on the chart.
- Always follow your pre-defined stop-loss rules.
- Generally do not interfere with the trade until either take profit or stop loss is hit. (Discretionary exits allowed depending on market conditions.)
- Do not trade just for the sake of trading.
- Only take trades with a risk-reward ratio above 1.0.
- Focus not on individual trades, but on whether your overall strategy has a positive expected value.
- Always have a scenario prepared for when the market moves in the opposite direction of your position.
- Make decisions solely based on the chart, not on personal bias or hope.
- Do not take trades trying to catch tops or bottoms without strong confluence.
- Do not get swayed by large price moves.
- Avoid trading during economic announcements. If already holding a position, consider closing it before the news; avoid trading during volatile periods.
- Avoid looking at others’ trading results on social media.
