Before you consider on applying this method into your trades, I expect that you should already have read the previous post which was all about the 'Retracement System'. On this post, you will get to learn how to properly gain entry on a bullish market condition from a retracement. Take note, this method is only applicable on a bullish market trend.
Entering SELL or SHORT entry from a retracement will be discussed on the next post.
How to start?
The image shown below is an example of a good retracement. The market trend started at point 1 going to point 2. At point 2, the trend seemed to have exhausted so it retraces back a little to point 3. This is where the most important part that you may need to stay on your sit for a while to be able to take the perfect opportunity to open a BUY or LONG entry order.
If you take a closer look into the illustration above, you will notice the small white-dot. Below the white-dot is the candle where you should be entering or placing your order.
As for the stop-loss, it should be slightly below the point 3's lowest price level that the candlestick had managed to reach. As you can see on our example above, I had set the stop-loss just slightly below the lowest price attained by the lowest candlestick of the retracement.
What's the use of the number 4 on the illustration above?
The number 4 which is also indicated by the orange horizontal line is the level where you can set your 'target-profit' or 'TP'. This is actually optional that when you do not have the time to baby-sit your trade, you can just let your position ride along the trend. But for maximum profit, it is best to set your TP then gain entry all over again on every retracement that occurs on the trend.
Entering SELL or SHORT entry from a retracement will be discussed on the next post.
How to start?
The image shown below is an example of a good retracement. The market trend started at point 1 going to point 2. At point 2, the trend seemed to have exhausted so it retraces back a little to point 3. This is where the most important part that you may need to stay on your sit for a while to be able to take the perfect opportunity to open a BUY or LONG entry order.
If you take a closer look into the illustration above, you will notice the small white-dot. Below the white-dot is the candle where you should be entering or placing your order.
As for the stop-loss, it should be slightly below the point 3's lowest price level that the candlestick had managed to reach. As you can see on our example above, I had set the stop-loss just slightly below the lowest price attained by the lowest candlestick of the retracement.
What's the use of the number 4 on the illustration above?
The number 4 which is also indicated by the orange horizontal line is the level where you can set your 'target-profit' or 'TP'. This is actually optional that when you do not have the time to baby-sit your trade, you can just let your position ride along the trend. But for maximum profit, it is best to set your TP then gain entry all over again on every retracement that occurs on the trend.
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