entry trigger mechanism

Subject: entry trigger mechanism Sun Aug 24, 2014 1:56 pm

It’s Time to Learn When to Pull the Trigger

You now know how to read price action to a point where you are ready to enter a trade. What you need now is to have a trigger mechanism that will allow you to execute your entry. You have read the support & resistance and supply & demand areas to determine good location, you have used the chart patterns to understand how price has arrived at this location, the same chart patterns also told you what type of trade you are about to attempt. You just need a defined repeatable way in.

If you have an entry trigger mechanism that also shows you on a much smaller scale that you are definitely not alone at your analyzed location, this will be your best way in to the trade. We will now use Japanese candlesticks as our entry triggers since this is a very common chart and everyone will have immediate access. In order for you to understand their place in the puzzle we will continue on with the 3 trade examples that we have been using so far. If you need a quick refresher then go back and revisit the Japanese candlesticks basics here.

Entering the Trend Continuation Buy

The first trade that we have been using for this course is the trend continuation pattern. With location and market structure on our side all we needed was a definable way to actually enter the trade. Seeing an indecision candle at our chosen location means that we are not the only ones thinking the way we are and a battle has begun. The only thing left is to see price pass that indecision in the direction that we want it to go and we can enter with confidence.
entry trigger mechanism Entry-trigger-pic1

entry trigger mechanism Entry-trigger-pic1

In this example you can see 3 distinct indecision candles at that location so we will work our way through them.

This indecision candle reacts exactly from our chosen area confirming that it is active,
all we need now is to pass its high on the next candle which does not happen.
This indecision candle continues on the indecision at our chosen area,
all we need now is to pass its high on the next candle which does not happen.
This indecision candle continues on the indecision at our chosen area,
all we need now is to pass its high on the next candle which does happen and that is our entry price.
By using indecision candle/s to confirm that the chosen area is active you can trade what is effectively the decision.

Entering the Double Top Sell

The next trade that we have been using for this course was the double top trade. The location was inherent within the structure itself and all that we needed was a definable way to enter the trade. By using an indecision candle once again we can confirm that we are not the only ones seeing things this way and a battle has begun. If price passes that indecision in the direction of our expected trade then we are effectively going with the decision that is then being made. Don’t forget, us retail traders don’t really move this market and we need to let big players fight it out and go with the apparent winners.
entry trigger mechanism Entry-trigger-pic2

entry trigger mechanism Entry-trigger-pic2

In this example there are 3 distinct indecision candles at our chosen location so we will work our way through them.

This indecision candle reacts exactly from our chosen area confirming that it is active,
all we need now is to pass its low on the next candle which does happen,
the negative on this trigger is that it is immediately following a marubozo.
This indecision candle continues on the indecision at our chosen area,
all we need now is to pass its low on the next candle which does not happen.
This indecision candle continues on the indecision at our chosen area,
all we need now is to pass its low on the next candle which does happen and that is our entry price.
What we have done here is effectively trade the decision that was made after indecision, and at the right location.

Entering the 3-Point Turn Buy

The last and most recent trade that we have been using in this course was the 3-point turn style pattern. This pattern followed the reset in the upward momentum and also the break of 2 major highs. Both the reset and the 2 major highs were of course all part of the double top itself which was the trade we just discussed. With location and market structure on our side all we needed was a definable way to actually enter the trade. Using an indecision candle once again we can confirm that we are not the only ones seeing things this way and another battle is underway. Once price passes the indecision in the direction of our expected trade then it would be a reasonable assumption that a winner is emerging.
entry trigger mechanism Entry-trigger-pic3

entry trigger mechanism Entry-trigger-pic3

In this example there are 2 distinct indecision candles at our chosen location so we will work our way through them.

This indecision candle follows the initial reaction from our chosen area ad confirms that it is active,
all we need now is to pass its high on the next candle which does happen,
This indecision candle continues on the indecision at our chosen area,
all we need now is to pass its high on the next candle which does happen and that is our entry price.

Once again we have effectively traded a decision that was made after indecision, and at the right location.
Adding to Price Action Confluence
In the previous lesson we covered price action confluence and the entry trigger mechanism simply adds on to that. It would have been too much on one page and all you need to do at this point is understand the concept of confluence. In the next lesson you will learn about one last thing that can be added to the confluence you look for.