Determining the perfect entry and exit point in the foreign exchange market is a hard nut to crack. Understanding market fundamentals and types of trading strategies are not enough to harvest maximum gain out of the market. The most important is determining the right forex entry point. The article with the following points:
Talking points
1) What does the forex entry point mean?
2) Top methods for determining the forex entry point
- Candlestick formation
- Chart patterns
- V formation
3) The Bottom Line
What does forex entry point mean?
Forex entry points can be defined as a price or gateway for investors to buy or sell or enter into a trade. Determining the entry point in forex is a complex task for investors due to the excess of multiple inputs which affect the foreign exchange market.
Top methods for determining the forex entry point
The right time to enter the foreign exchange market depends on the style and strategy of trading. There are several techniques which serve the purpose. Some of them are mentioned below:
1) Candlestick formation
It is the most reliable and popular entry point determining method which many investors follow. Here, two patterns are generally used by seasoned investors which include the shooting star and the engulfing. Candlestick patterns help in predicting the exact entry point or price. Thus, it provides investors with a higher chance of success. It is the most famous element of technical analysis, allowing investors to trigger a trade.
Pros and cons of candlestick
The various advantages and disadvantages associated with candlestick are:
Pros
- It is the most popular and commonly used forex entry determining technique
- It suits those traders who are very suspicious
- In this method, stop losses, and entry can be readily defined
Cons
- It is good for only two types of traders: intraday traders and active traders
2) Chart patterns
Chart patterns are a graphical representation usually plotted on the historic price over a different interval of time. There are two major categories of famous chart patterns: reversal patterns and continuation patterns.
Reversal patterns reflect the trend reversal in the future while continuation patterns reflect a continuation of the present trend. They allow traders to set price objectives and determine entry points. Though being a standalone-trading technique, chart patterns can be an excellent entry strategy as well.
Some of the famous chart patterns are as follows:
- Wedges
- Double top
- Head and shoulders
- Pennant or flags
- Descending triangle
- Double bottom
- Cup and handle
- Rounding bottom
- Ascending triangle
- Symmetrical triangle
Pros and cons of chart pattern
The various advantages and disadvantages associated with chart patterns are:
Pros
- It is easy to spot entry points through this method
- It is a momentum and early entry method
Cons
- The disadvantage of this method is that it takes a long time to develop patterns
3) V formation
It is not like the usual V structure in which the price of security declines and surges sharply. You require to estimate the strength of declining price by comparing it with the surge and vice versa for deciding the trade execution on its pullback.
Pros and cons of V formation
The various advantages and disadvantages associated with V formation are:
Pros
- This forex entry technique is based on the momentum
- You can easily define stop losses
Cons
- It is hard to determine the correct entry point with this technique
- Price of asset may not pullback
How to start trading in the forex market?
To start trading in the forex market, you require an online trading account with an authentic financial service provider. The steps for opening a trading account are simple and instant. These are as follows:
1) Visit the broker’s site and get yourself registered by providing details such as name, last name, country, phone number, and email id for verification.
2) Enter the OTP number which appears on your phone or email id
3) Once the phone or email verification is done, you will be redirected to the documents page. You are required to upload certain documents including identity proof, address proof, and financial and bank statements not older than six months.
4) Choose the forex or currency pair you wish to trade and deposit the amount for the same.
5) Now you can start trading
Now you must be wondering about the top financial service providers. We have made it a bit simple for you by providing some top ones. These are:
1) T1markets: T1markets is a leading financial service provider regulated by legitimated the Cyprus Securities and Exchange Commission. The minimum deposit to start trading with the broker is $250 without any commission fee. The broker earns through swaps and spreads. The trading through T1markets is allowed through web trader, MetaTrader 4, and mobile application.
2) Global TradeATF: Global TradeATF is another authentic firm established in the year 2013. The broker allows trading on numerous assets including currency pairs, commodities, cryptocurrencies, indices, and stocks. Trading with TradeATF can proceed through the MetaTrader 4 trading platform at a minimum deposit of $250. The broker also provides various educational and research tools such as latest news, economic session calendar, repost session calendar and trading signal.
The Bottom Line
Many analysts have felt that traders make unconscious and impulsive decisions when trading in the forex market. Thus, it is essential to note that whatever entry technique you choose to utilise, plan the trade carefully and wait for those market conditions to arise. It will help you to get a route forex entry point. The first and last rule of efficient trading is to pursue a trade with robust entry support at that particular point. Numerous traders fail to make the right decisions and do not consider trading techniques and entry rules while trading.
Moreover, remember that trader never takes any emotional decisions and never chase the financial market just because an asset’s value is actively shifting. The article must have conveyed all the points related to the forex market entry point to read more about the forex trading and forex market trading strategies you can visit www. fx reviews. best. If you are conscious about entering the market, you can go with the brokers’ demo trading account. One such broker offering virtual trading accounts is Global TradeATF.
Frequently Asked Questions
Q1) What does the forex entry point mean?
Forex entry points refer to a price or gateway for investors to buy or sell or enter into a trade.
Q2) What is a candlestick?
It is the most reliable and popular entry point determining method which many investors follow. Here, two patterns are generally used by seasoned investors which include the shooting star and the engulfing.
Q3) What are the cons and pros of the chart patterns?
The pros and cons of chart pattern are as follows:
Pros
- It is a momentum and early entry method
Cons
- The disadvantage of this method is that it takes a long time to develop patterns
