Is it really this "easy"?  Well, the concept is, but like most things, knowing is usually easier than DOING.

Step One.  Identify the market cycle.  Use the the Wave.  Whether you know it or not, every entry strategy ever devised was designed for a certain market environment.  Somehow that fact has been lost and certainly the allure of that one magical set up is tempting for many traders.  It just doesn’t work that way.  Market go up, down, and sideways.  You need a way to enter all, and that means at minimum three entry strategies.

Step Two.  Once you know the direction of the market, now you know which entry style to use.  Simple?  Well only if you know which of your strategies are breakout/down or trend following.  Some of you might even have a range-bound entry strategy.  Have all three?  You’re set.

Step Three.  Confirm your entry with some sort of filtering indicator.  Indicators should not be used to make entry decisions, but they are terrific filters.  I use the MACD Histogram for momentum entries, CCI for reversal entries, and the Wave of trend following.  Occasionally I will use a slow stochastic for range bound entries.

Now there is all the detail that you must work into these broad strokes…but some trades don’t even do the *obvious* I’ve listed above.  Understanding order entry will give you an edge in getting your price.  Using chart patterns will offer more and better trade opportunities.  Fibonacci levels and pivot will assist you in finding support and resistance levels and trade management.  This is where you trading style can be more personal and designed for your own approach to the markets. 

Each Tuesday we talk about these steps in detail.  Join me here at FX Street for the chart pattern trading webinar each Tuesday and you can see it at work in the LIVE market.

You can also join me tomorrow for the Forex for Newbies webinar at raghee.com.

- Raghee