Video: This 1 Simple Entry Rule Will Boost Your Trading Accuracy

Powerful trading concepts to boost your consistency and long-term performance in the Forex, Indices & Commodities markets.

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What’s Your % Hit Rate?

Out of every 10 trades, how many of them are winners? 40%, 60%, or even 80%….

If you’re reading this, chances are it’s on the lower end. Most traders struggle to maintain a high hit rate in the long term. Many take losing trades and make the money back by the bigger winners that come later – so even a 30% win rate can still be profitable if you have a high Risk:Reward ratio. But that takes a very strong psychology and consistency. Getting 70% of your trades right or above is considered good performance.

Regardless of where you’re at, who wouldn’t want to have fewer losers and more winners…!

Today we go over a simple way to do that. This video will cover:

• Why not every setup that looks good is the same as others
• How to filter out the low-quality setups
• Where you want to focus your entry on
• Getting higher Risk:Reward

Your Setup Might Look the Same as Before, But Some Setups Are More Equal Than Others…

Initially, these two setups – with a Sell bias – look very similar…

Without any other reference point, you can be fooled into seeing a retracement here, to continue the downtrend. The blue arrow may be your idea. But that’s seeing things without an important piece to this puzzle. While yes, they both may work out, in the long term, how do we know which one will be a higher probability situation that has more accuracy? What makes one better than the other?

Use Open & Close Prices as Your Reference Point

Now look again, this time with yesterday’s daily closing price on the chart:

At the time of wanting to take an entry, the chart on the left was above yesterday’s closing price (or current day’s open); and the one on the right was below the open price.

Therefore we can see 2 important details:

• The left one was at an expensive location – relative to the open/close price of the D1 candle. Remember: We only want to Sell at an expensive area and Buy at a cheap area.
  
  and secondly
  
• The market should NOT have already made a move in the direction of bias. Why? Because it’s likely that it still has more pips to travel for that particular day (or week or month, depending on the timeframe you’re using). If it hasn’t yet travelled in the intended direction and it’s been ranging, it’s far more likely to start trending again.

Therefore, since the left one was higher relatively, and didn’t yet make its move for the day, we can say that the left one is the better option to trade.

As you can see, while the chart on the right made a move, it ultimately didn’t work well. The left chart was a much smoother flow.

How Do I Use This Concept in My Setups?

Just adding the simple idea of taking the higher timeframe candle, and looking at its closing price, you can use that price marker as your reference.

Let’s say you’re a day trader. So from now on, your new additional criteria to your setup could be: “I will only Sell if market is above the open of the day. And I will only Buy if market is below the open price.”

I will only Sell if market is above the open. I will only Buy if market is below the open.

The idea here is to combine the timeframes so that the lower timeframe entry is relative to the higher timeframe.

The easiest candles to take as reference points for open/close prices are: D1, W1, M

Mark your open/close prices when you are looking for entry, or use an indicator that does that for you. Use them in combination with your regular analysis, to add to your probabilities, creating a confluence of concepts that strengthens the setup.

Key takeaway is:

Anticipate a move in the opposite direction first, relative to open/close price – then use this price as a reference point for entry

Try it and let me know in the comments below what happens.

Happy trading everyone.

Written by: Dima Mihailovich, Technical Analyst for Forex Prop News

Contact and follow Dima on Twitter: @dimafpn

Image by sergeitokmakov, on Pexels
Image by Mohamed_hassan, on Pixabay

(Please note: All comments made in this video and article are not trading or investment advice and are for education purposes only. You are responsible for your own decisions and the risk that goes with it.)