We could also place the stop-loss order for the short position opened at 2. Later when the price action touches the trend for the fourth time at the place indicated by the fourth down-arrow, we can enter two consecutive short positions, closing them once again when the Williams Oscillator registers an extreme value.

Needless to say, traders using the gradual entry method can trade in many different conditions using various indicators and indicator combinations, and it is good to keep in mind that the example above was especially chosen for clarity and simplicity.

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No single method or strategy will help us reach consistent profitability, but there are some tried and tested methods and rules, such as the carry trade, the layered-entry strategy discussed here, or the principles of money management, which will shorten our route, and lighten our burden considerably. To compare forex brokers while seeking the best offers, and to try different strategies while searching for those best suited to our character, and thereafter to combine them, is the most efficient and prudent way for those who seek to attain success and credibility in trading while suffering from minimal headaches and losses.

Thank you for bringing it up. I agree with you, that the first few arrows on the screen shot are set incorrectly, unless, of course, the trend line existed earlier which is not evident from the chart.

Hi Edward, in this article you say when red down arrows show price action touches trend line See paragraph below chart. Active traders Poll - share your live experience or read what others have to say.

Forum What is Forex? You can help thousands improve their trading! Submitted by User on August 15, - Building positions step-by-step: A safer approach to trading A basic difference between how a novice trader and a professional trader behave is in the choice of trade sizes, and position building.

Money management system #4 (Scaling into a position) | Forex Strategies & Systems Revealed

But it is just one of the many aspects of trade timing that is complicated by the unexpected inconsistencies which appear between price and everything else. So if we had the choice, we would prefer to exclude price from all the calculations made in order to reduce the degree of uncertainty and chaos from our trades. Unfortunately that is not possible, as price is the only determinant of profit and loss in our trades. In trade timing, the trader has to take some risk.

How It Works

The best way of taking the risk and avoiding excessive losses is using a layered defense line, so to speak, against market fluctuations and adverse movements and we discussed how to do this in our article on stop loss orders. The best way of taking the risk and maximizing our profits is the subject of entry timing, and the best way of doing so is using an attack line that is also layered. What do we mean by that? In ancient warfare, it was well-understood that the commander must keep some of his forces fresh and uncommitted to exploit the opportunities and crises that arise during the course of a battle.

For instance, if the commander had run out of cavalry reserves when the enemy launched a major charge against one of his flanks, he might have found himself in an extremely unpleasant situation. Similarly, if he had no rested and ready troops to mount a charge at the time his opponent demonstrated signs of exhaustion, a major opportunity would have been lost. The layered attack technique of the trader aims to utilize the same principle with the purpose of not running out of capital at the crucial moment. In essence we want to make sure that we commit our assets that is our capital in a layered, gradual manner for the dual purpose of eliminating the problems caused by faulty timing, and also outlasting the periods associated with greatest volatility.

By opening a position with only a small portion of our capital, we ensure that the initial risk taken is small. By adding to it gradually, we make sure that our rising profits are riding a trend that has the potential to last long. Finally, by committing our capital when the trend shows signs of weakness, we build up our own confidence, while controlling our risk properly by placing our stop-loss orders on a price level that may bring profits instead of losses.

To sum it up, the golden rule of trade timing is to keep it small, and to avoid timing by entering a position gradually. Since it is not possible to know anything about the markets with certainty, we will seek to have our scenario confirmed by market action through gradual, small positions that are built up in time.

Trade Timing – How to Decide Entry/Exit Points

This scheme will eliminate the complicated issues associated with trade timing, while allowing us great comfort while entering and exiting trades. In such cases, the exact price where the position is opened is not very important. So we will not be discussing such situations in this article. In the previous lesson there were 3 candlestick entry triggers that you would have had your eye on to enter this trade, with the use of layers there is clearly only 1 candlestick that you would be interested in.

Our final trade to review with the addition of layers introduces a different situation. The original entry trigger from the previous lesson is not in line with our new layer and so the entry may have been missed. The use of layers though provides a different entry trigger opportunity with more proof attached to it.

In the previous lesson, there was an entry trigger at a great location but here it is not yet inline with the black layer that we have added. Once the 3-point turn starts to present itself on the black line there is another indecision candle to use as an entry trigger. Food for thought: If you did take the original entry trigger from the previous lesson, this new entry trigger based on layers could have been used to add to your position.

In the previous lesson, we covered entry triggers and in the one before that we covered price action confluence. The use of market layers simply adds on to both of those pieces of the puzzle but does remain optional at the daily chart level. The lower the time frame the more valuable the use of market layers can be, and as you can see they can still be very effective even at the daily chart level.

Martingale

So Many Traders, So Many Styles With so many different types of trader and so many different trading styles, it is no surprise that the Forex market has many layers of price action at play. Entering the Trend Continuation Buy with Layers Since we are trading what is represented as the green swing on our chart examples, we must look for a layer of price movement that is below it.

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This indecision candle reacts exactly from our chosen area confirming that it is active.