Entry and exit points can vastly influence the results of trading. What kind of strategy can you use to decide it?
Many people said that the truth is relative. Something that is right for someone might be wrong in the eyes of others, and vice versa. But do you know that the same thing exists in forex trading!?
Many people think that in a certain market condition, traders will only able to profit with sell only or buy only. They even debated on which analysis method is best; this or that technical indicator, or whether fundamental analysis is the way to go. In fact, the right decision in forex trading is not limited to just one of the two, or even both of them.
Forex Entry And Exit Level
Forex traders, particularly the beginners, often misundertands; they think forex trading is about predicting the next direction of price movement. When in fact, just knowing whether prices are bullish or bearish is not enough.
Let's say Miss Jones predicted EUR/USD will move in bearish movement because fundamentally, US Dollar is stronger than the Euro. Because of that, she sold EUR/USD on 1.248 with hopes for the price to move lower.
But after that, EUR/USD moved up to 1.257. Consequently, Miss Jones suffered losses either because her position hit stop loss order or triggered margin call. However, after touching 1.257, EURUSD moved lower, and yes, it touched 1.236. But that level is only reached AFTER the pair went up and inflicted losses on Miss Jones account balance.
From the example, we can conclude that just being able to predict the next direction of price movement is not enough. Without the right entry strategy, a forex trader might open orders prematurely and gets losses instead of profits.
As well, without the right exit strategy, someone might regrets less-than-optimum profits, or lets a position floats away to losses. Because of that, a forex trader needs to be able to recognize key entry and exit levels.
Entry and exit levels have to be planned before started opening trading positions. Beside of that, forex traders also have to make back-up plans; what he or she will do if things don't go well, or some other unexpected things happen.
There are many techniques that could be used to determine entry and exit levels, as well as subsequent contingencies, both from fundamental and technical perspectives. Schlossberg and Saettele have proven that no matter how you analyze price movements, you could profit as long as you are able to enter and exit the market at the right time.
When Long and Short Entry Both Turn Profitable
In his newsletter last week, currency analyst Boris Schlossberg told how he and his friend that is also a DailyFX trader, Jamie Saettele, took different positioning following Eurozone Central Bank surprising statement. Saettele is said to have been trading by analyzing Elliott Wave patterns.
On the other hand, Schlossberg is known as a reliable fundamental analyst and have been quoted by international media such as CNBC, Bloomberg, and Reuters. Following November 2014 ECB statement, Saettele opened long position in EUR/USD pair, while Schlossberg shorted the pair. As seen in the following screencap from their respective Twitter accounts, both managed to gain profit.
How could it be? According to Schlossberg, the key of forex trading is in entry and exit level. Both he and Saettele focused on the key entry and exit level according to their respective analysis.