the edge of entry in trading

Understanding the Edge of Entry in Trading: Key Insights for Success

In trading, particularly in markets with high liquidity, reaching a critical price level after a significant move and a suitable correction can trigger a competitive environment for entry. This is often when traders believe the price has dropped below its intrinsic value, creating a buying opportunity. As more traders jump into the market, the competition intensifies, driving prices higher.

However, large and knowledgeable traders recognize these price opportunities earlier and enter the market sooner, impacting price movements significantly. Their actions often result in a candlestick that signals a shift in the order flow. For smaller, less experienced traders, the realization of this shift comes later, leading them to enter the market using tools that may not be as timely.

When the Entry Edge Candlestick is Missing

At times, a potential trading opportunity may present itself, but the entry edge candlestick doesn't form. This can be frustrating, but it's important to remember that not every market opportunity will align with your strategy. Just as a store can't attract every customer despite having the best location, not every market setup will meet your criteria.

Instead, a skilled trader knows that missing some opportunities is part of the game. Experience and skill are essential in recognizing when to enter based on alternative criteria, like the slope of market movements or unusual candlestick formations.

When to Exit a Trade

After identifying the order flow change candlestick, it's essential to keep monitoring the spread in the forex market. If the spread widens beyond usual ranges and price changes are rapid, consider closing the trade before the candlestick reaches its highest point. In cases where the trade is entered on a lower time frame, use a stop-loss placed above 50% of the large candlestick, anticipating a possible correction.

The Concept of Order Flow Change Candlesticks

To successfully enter a trade, it's crucial to identify when order flow changes. An order flow change candlestick indicates a shift in the direction of price movement, like a reversal from a downward trend. However, this doesn't automatically guarantee the ideal entry point. Large candlesticks may raise transaction costs, and the distance between the stop-loss and entry point increases, making the trade less logical.

Ideal entry points are seen when small candlesticks follow a correction, signaling indecision. The most favorable entry occurs when a candlestick forms after this indecision and closes in the upper third (in an uptrend), covering several smaller previous candlesticks.

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