• Understand Entry Opportunities
Understand The Best Trade Entry Areas.
Last updated
Understand The Best Trade Entry Areas.
Last updated
Once you have established the Trigger Line configuration, also known as Rule #1, which involves small triggers positioned above the large triggers for long trades or small triggers positioned below the large triggers for short trades, you have identified the primary look when the trend is most likely to continue. However, it is crucial to remember Rule #2, which deters traders from entering a new trend trade at a Termination Condition.
Having understood these principles, it is now time to focus on selecting your entry area. Pinpointing the entry area involves looking for specific indicators such as Fibonacci lines, mid-band, or one-to-one levels that are positioned "inside" the 5-1 large triggers. This identified area will serve as your entry spot. Utilizing this technique will define the entry area for each 5-1 trend trade.
It is important to emphasize that in real-time trading, you must decide to buy or sell during a pullback while the market is still moving in the desired direction away from the entry point before the actual pullback occurs. The moment you choose to buy the pullback and select your entry areas within the large triggers at Fibonacci and Mid-Band levels is depicted in the accompanying chart.
As the market begins to experience a pullback, it is crucial to identify and highlight the indicator line(s) between the LARGE triggers on the 5-1 chart that encompasses Fibonacci levels, Midbands, or one-to-one yellow or magenta dots.
When observing the pullback, focus on the region within the large triggers that incorporate these key indicators. This area serves as a significant zone of interest for potential entry points. By highlighting this specific region, traders can effectively target their attention on potential trade setups that align with the presence of Fibonacci, Midband, or one-to-one dotted levels.
To practice this exercise on your charts, go to the smaller time frame chart you will use for an entry...
Find the LARGE Trigger Lines on your faster timeframe chart - There will be TWO sets of Large Trigger Lines placed on your smaller timeframe ( Entry ) chart. The reason we do multiple sets of Large Trigger Lines on this time frame chart and only one set of large trigger lines on your larger timeframe chart(s) will be explained upon reading further.
You will visually locate the UPPERMOST point of one of the Large Trigger Lines and the BOTTOMMOST point of the other set of Large Trigger Lines. If you draw an imaginary line between the two points... any Midband, Fibonacci Level, or Yellow/Magenta 1:1's Dots inside of that "window" again; (the uppermost point and bottommost point of your Large Trigger Lines Only) will be the best possible spot for a potential trade entry.
The reason why we place two sets of Large Trigger Lines on our smaller / entry time frame chart is that often the market is moving with haste, and the software can calculate multiple Fibonacci levels we may think of as a potential entry spot. To narrow and hone in on the Most Likely level from which a trade will occur, we will use this technique.
IMPORTANT NOTE: To keep you from guessing which Fibonacci level you will place an entry at... A Fibonacci level, 1:1 level, or Midband that is OUTSIDE of the Large trigger lines will be disregarded and does not serve as the "Highest" probably spot of entry and no trade will be placed. If a Fibonacci level, Midband, or 1:1 Yellow/Magenta Dots plot outside of the large trigger lines these levels again, will be Ignored and no trades will be placed from these levels.
Once the entry is executed, adjusting the stop-loss order as the market resumes the trend by forming upward or downward bars is crucial. It is important to note that this consistent pattern is observed when studying and executing 13-2 and 5-1 chart trend trades.
As the market shows signs of resuming the intended trend, monitor the price action and adjust the stop-loss order accordingly. This approach ensures that the stop-loss is positioned to protect profits and manage risk effectively as the market progresses.
By being attentive to the market's behavior and adjusting stops based on the formation of up or down bars, traders can maintain a disciplined approach to risk management. This strategy aligns with the consistent nature of 13-2 and 5-1 chart trend trades, facilitating more robust trade execution and potential profitability.
The provided visual illustrations serve as a valuable training resource for traders to understand and recognize various trend trade setups encountered while studying and participating in the markets. Reviewing the video "Trading the edges, tops & bottoms" is recommended to enhance your knowledge and skills further.
Revisiting the concepts presented in the aforementioned video will provide you with additional insights and strategies for effectively trading at key market edges, tops, and bottoms. Incorporating these principles into your trading approach can enhance your ability to capitalize on favorable trading opportunities and optimize your overall trading performance.
In the following example, two trend trades are illustrated. The second trend trade specifically highlights the trade setup that traders should consider after a significant top has been established in the market. Pay close attention to the strength of the trigger lines on the 13-2 chart and the positioning of small versus large trigger lines on the 5-1 chart. By doing so, traders can avoid overlooking this trade opportunity, which may be influenced by the presence of a blue Fibonacci level on the 5-1 chart's low.
Analyzing the trigger strength on the 13-2 chart and evaluating the relative location of small and large trigger lines on the 5-1 chart are key factors to consider when identifying and executing this particular trade setup. Despite the presence of the blue Fibonacci level on the 5-1 chart's low, it is important not to disregard the trade opportunity if the trigger signals align favorably.
When considering trend trades, aligning your trading decisions with relevant Fibonacci-based areas is essential. These areas serve as key levels of support or resistance within the market. By confirming the existence of large triggers at the specified prices, you can enhance the reliability of your trade entries.
By adhering to this approach, you can strengthen your trading strategy and increase the precision of your entries. This method ensures that you focus on high-probability trade setups that incorporate Fibonacci-based areas and align with the confirmation of large triggers at the intended prices, fostering a more informed and effective trading approach.
Occasionally, it is possible to experience a loss in a trend trade or exit the trade due to a higher or lower divergence. However, if the larger chart trend remains well-established and unchanged, re-entering the trade may be possible. This re-entry occurs when all three trigger lines cross in the same direction, referred to as a "continuation trade."
A continuation trade involves re-taking the trade after confirming the alignment of all three trigger lines in the desired direction. This strategy allows traders to capitalize on the ongoing trend. The provided chart demonstrates two instances where such continuation trades are observed.
The accompanying image depicts a trade scenario where a loss occurs, followed by a continuation of a short trade. To navigate such trades successfully, it is essential to review the video titled "Trading the edges, tops & bottoms." This video provides valuable insights into identifying and leveraging key market edges to anticipate price movements, ultimately increasing the likelihood of reaching more significant Fibonacci targets.
By studying and implementing the strategies highlighted in the mentioned video, traders can develop a heightened expectation of capturing extended moves during these trades. It equips them with the necessary knowledge to identify optimal entry and exit points based on market edges, tops, and bottoms.
In the given scenario, the presence of bad bottoms and split large triggers on the 5-1 chart presents two potential trend trades, as indicated by the yellow text. The decision regarding which area to trade in the market depends on the quality of the bottom, as explained in the tops and bottoms video.
Upon assessing the quality of the bottom, traders can choose between the first circled long area or the second rectangle area as their entry point. The selection of the appropriate entry area is crucial for effectively trading the market based on the identified trend.
The provided example shows that the lowest low at the exit point of the trend trade short did not correspond to a significant Fibonacci area. Consequently, the long trade occurred from the farther large trigger, which is the proper entry area in this case.
Remaining vigilant in selecting entry areas ensures a strategic approach to trading and positions traders to capitalize on market opportunities more effectively.
In the first short example, it is crucial to emphasize the importance of placing an initial protective stop at a level the market should ideally not reach while still allowing for some breathing room. Recognizing that the market may occasionally "slightly overrun" the large triggers and designated areas is essential. Therefore, it is advisable not to set the stop too tightly when initiating a short trade. This approach helps traders avoid premature stop-outs and allows for potential market fluctuations within a reasonable range.
Moving on to the second scenario, when a significant bottom is identified based on the criteria outlined in the video, and the market exhibits a robust upward move, it may require executing a trend trade that is not precisely at the large triggers on the 5-1 chart. A rectangle in the provided illustration represents the entry area. This entry area will typically encompass multiple Fibonacci areas, including Fibonacci levels, MidBands, and/or One-to-Ones. The quality of the termination condition on the 13-2 chart will play a crucial role in determining the suitability of executing this long trade above the 5-1 large triggers.
Following a well-defined top, traders should actively seek the first available opportunity for a trade. This particular trade, however, does not fall under the category of a trend trade but rather a momentum-style trade. Although Nexgen traders typically share it daily, it has been included in the trend trade section here to introduce the HVA (High-Volume Area) trade look for documentation purposes.
Engaging in this style of trade, especially after identifying a high-quality Fibonacci top or bottom on multiple charts, such as the 8-range charts with consideration of market flow and/or the 21-3 chart, can contribute positively to your overall trading performance when you feel prepared and confident to take it.
By incorporating this momentum-style trade in conjunction with a meticulous analysis of various charts and identifying significant Fibonacci levels, traders can enhance their trading outcomes and ultimately increase their profitability.
It is essential to recognize that engaging in such trades requires a comprehensive understanding of market dynamics and an ability to identify key levels and patterns. Combining this knowledge with your readiness and experience can effectively integrate the HVA trade look into your trading strategy and improve your overall results.
Open your workspace in NinjaTrader, and maximize the 13-2 chart.
Utilize drawing tools to draw circles on the "wicks" or "tails" on the 13-2 chart that occur while the large and small trigger lines exhibit strong momentum trending characteristics.
The circles you mark on the 13-2 chart will automatically appear on the corresponding 5-1 chart locations.
To build a library of trend trade examples, utilize screen-capturing tools such as the TechSmith Capture Tool or any other screen-capturing software.
Save and organize these captured images in your trade tracking sheet, which Nexgen will provide.
By capturing 10-15 pictures daily, you will quickly become familiar with recognizing profitable trend trade setups.
Back-testing at least 100 historical trend trades across various markets while using the demo account is essential. Repetition is key to solidifying your understanding and gaining confidence in identifying proper trend trade opportunities.
The provided video example below explains the process of visually back-testing historical trend trade setups.
This study technique is crucial for accelerating your progress in making real profits. By consistently practicing and studying these historical examples, you will develop the necessary trust in expected outcomes, enabling you to execute trades confidently during live market conditions.
It is important to note that as a new user, you can access the same tools as experienced Nexgen traders who achieve significant success. The difference lies in the trust they have built through repeated exposure to expected outcomes. You, too, can reach that level of confidence with practice and dedication.
This technique can also be applied when transitioning from trend trades to studying termination conditions and HVA trades. Simply mark circles or rectangles around each termination condition and then identify the entries on the 8-range chart.
If you have any questions or need assistance, feel free to ask in the "ask questions" section of the Discord community or reach out to your client advisor via email if you cannot attend live classes.
