Trade Entry Techniques
The art of reading the market prior to entering a trade & using the correct entry technique
Day trading at the highest level will require you to know when to enter at support or resistance or wait for confirmation before entering. This section will cover pre-trade indicator configurations such as trigger line reading and divergence conditions that will require one of the two entry types. The trend trade specifically has several pre-entry looks that will require you to either enter at the trade entry zone with a limit order or wait for a market flow signal.
The easiest trade to execute will be when every trigger line chart is strong, combined with a clear support or resistance window and plenty of room to the profit target. Limit orders will be placed 1 or 2 ticks before the support or resistance area. inside the large triggers using the 5-1 chart. The following example's entry area is clear when the trigger line direction favors the entry.
All 6 triggers strong and room to target, entry at areas using a limit order
The trade shown in the picture below is a cross between a momentum style trade and a trend trade. You will also use a limit order at support when there is divergence on the 5-1 chart due to a higher or lower (trend-dependent) pivot with all trigger lines crossed in your favor. This example is taken from the classroom video on March 17th, 2021, which is available on the educational video page in this document.
Ignoring 5-1 divergence and enter at support with a limit order when triggers are strong
In the Trend Trade video lesson, you will see this same entry at the correct spot as the market reaches it using a limit order repeated several times using the rules checklist. You may think of making your own checklist of important items to double-check before entering trades.
entering at the spot using a trend trade checklist from the trend trade video 8-21-2021
It takes time to get comfortable entering short as price moves against your intended trade direction. Selling high technique attempts to reduce the overall risk and increase your profit potential. The following picture is also taken from the video above. This is what your chart will look like when you enter as the market enters your trend trade zone.
What your charts look like when you enter on the way into your trend trade zone
The 13-2 Trigger line look combined with the 8-range chart will help you determine if you should enter early or wait for a market flow signal. The stronger the areas and triggers on the 13-2 and 8-range charts the more assertive you can be with your trend trade entry. The following picture shows you two options for the first trend trade, at the spot or after a market flow signal. The second long entry should wait for a market flow signal due to 5-1 divergence near a Fibonacci, weak 13-2 triggers, and a double market flow signals down before the long trade. Typically will end up with one more entry setup after you get close to a Fibonacci target when the trend is very strong. Most experienced Nexgen traders take the "last" trade, while new users may miss the last trade while learning to trust that the strong trend will produce one more winner.
Check 13-2 triggers strength and 8-range trigger location
This next example chart pattern usually happens every day. A "pivot stop out" of a divergence line before a trend trade. Price will exceed the prior high almost every time. Generally, there is a prior divergence high that is exceeded before entry. Not always the case, but with our without divergence high, expect the high price to be exceeded before entry. This becomes a "trend trade" that is also a "pivot stop out" entry as price stops out the prior divergence high.
Divergence pivot stop out prior to trend trade
Many times you will be able to combine trade setups and entry logic to find precise entries. In the following example, we use the pivot stop out logic, combined with the rules for an HVA trade to place a limit order 1 tick below the HVA line.
Pivot top out logic combined with hva trade logic
When the market is trending, you will encounter a lower low pivot that has divergence. Suppose the lower 2nd pivot has divergence that is lower than the first high pivot. A lower 2nd divergence pattern on the 5-1 chart requires waiting for a market flow signal. The indicator conditions often change, invalidating the trend trade rules, causing you to avoid executing a losing trade.
If 2nd pivot is lower- wait for market flow signals- conditions may change before entry
When both the 5-1 chart and the 8-range chart have divergences prior to your trend trade look, most of the time you will not get your trade. Pay particular attention that the correct entry areas are reached before you look for market flow signals. Typically this is the look that happens before the market makes it to the lower Fibonacci edges. Avoiding this loss allows you to buy the edge.
when both charts have divergence use extreme caution
If you love edge trades, or just buying or selling at an advantageous area, the YELLOW-ANTENNA-STRANDED BUYERS/ SELLERS is the single best market flow signal. The following chart is a continuation of the chart above that had two divergences, and as expected the market made it to the edge. The market flow generated the "best looking"( opinion of JN) market flow yellow-antenna with stranded sellers long signal. Thus a long trade was initiated with a limit order after the bar. I have added a 3rd (after picture) to highlight the first exit.
Yellow antenna with stranded sellers at the edge of support before and after picture
You may also choose to wait for the edge to hold, then enter with a continuation trade. If already long you may choose to "add on" to your existing position. Both are true in the following picture.
Continuation entry or add on to an edge long
Higher low pivots with a divergence that will require a market flow entry signal do not always exceed the prior pivot high. In most instances, the price will exceed the prior high before resuming the trend, but this is not a requirement. Being ready for the market flow signal is important, especially in a strong trend. Lower low pivots with divergence in a strong downtrend do not require a market flow signal before entry.
Higher low divergences- use Market Flow entry- does not ALWAYS take out prior high- but most of the time it does
Many times the higher/ lower 2nd divergence will push the market to the edges of the 13-2 or 21-3 chart. This will be the time to look for continuation entries if that is part of your plan. Keep in mind, doing a continuation trade, you do not need both large triggers to be crossed in the direction of the trade as in a trend trade.
Pivot stop out -no signal -then continuation entry at same spot
A divergence may also push the market down to a pivot stop out and the edge of support. If for some reason there is no market flow signal, no assertive entry at the one-to-one, then you may look for a "continuation" type entry when the small triggers and support come together. Place a limit just above the area that lines up with the small triggers. In this example, the area is the mid-band and 5-1 small triggers.
Trend trade long and 2nd chance entry
As previously stated, any higher/lower (trend-dependent) pivot that includes divergence will generally be ignored when every trigger line is strong. We will now look at another case when you must wait for a market flow signal regardless of trigger line conditions. This is a VERY COMMON occurrence and is easily managed. In the following picture, the high on 5-1 has divergence, plus the market flow has a double sell signal, combined with the prior divergence low and the price touching and failing at "rolled over" small triggers on the 5-1 chart suggests the market may go lower and make a pivot stop out of the cyan divergence line before going up. This pre-setup look requires you to wait for a market flow signal. Sometimes price may reach "the edge" before going up. Waiting for a market flow signal is very important.
watch for pivot stop out and market flow entry signal
When there are multiple-choice support areas for a trend trade plus divergence on the 5-1, let the market flow signal help you define the entry. Also, notice the 8-range high was marked by a yellow paint bar followed immediately by a white paint bar. Waiting for the long signal to be true is best. Waiting for a signal after the small triggers on the 5-1 chart have turned down strongly and have too much momentum into the multiple-choice trend trade area. When there is not a buy signal, there is not a trade. This simple rule will save you many losing trend trades on the 5-1 chart. This may be the time to look for continuation setups after the small trigger lines roll if the edges hold.
Divergence plus a yellow white paint bar combo- wait for a signal it may never happen
Review the step #4 market flow section of the educational material for more market flow entry ideas.
Continuation Trades – This is a great way for new traders to recognize the edges, but slow the entries down until the 5-1 chart small trigger lines have crossed favoring the continuation. This will provide many 2nd chance opportunities when the 21-3 chart and 13-2 Fibonacci and trigger line reading suggest the continuation of a trend is probable. Usually, the edges of the 13-2 and 21-3 charts will be "tested" by the market price after the 5-1 chart has “terminated” the high or medium probability trend trades. Wait for a 5-1 trigger line to roll and then attempt your trades at key areas. See the example pictures below.
After the 5-1 chart terminates, wait for 5-1 trigger lines to resume the trend
When you reach that "last long trade situation" where the entry is not going to be on the correct side of the 5-1 large triggers, it is ok to wait for a market flow entry. Depending on the entry bar, you may elect to have a limit order to ensure you have a good fill for less risk. No divergence on the 5-1 chart is very helpful when taking "one more". See the example trade below.
Waiting for a market flow entry, and making sure you get a great fill price
More information is available to reinforce these lessons in the management video below.
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