The general approach that I use is to develop specific setup conditions that, when present in the market, indicate that I should consider entering into a new position. So the first thing is to identify the conditions that occur relatively infrequently in the market, but that when they do, a high probability opportunity awaits.

This is a very important concept, because one of the keys to successful Forex trading is to wait patiently for the prime opportunity to enter the market. Amateurs too often become impatient and want to trade just for the sake of trading and consequently enter the market under other than ideal conditions. This greatly reduces the chance of a successful trade.

Another key concept to find entry points that is common to most types of trend trading is to attempt to buy into support levels and sell into resistance levels. The success or failure of this attempt lies in the robustness of the setup conditions defined in the trading method.

Once the setup conditions are in place, specific entry rules need to be followed to “trigger” the actual trade. For example, one of the pairs that you are following may meet the setup conditions for a long trade. Now, depending on the trading method, the entry order could be a Stop order that says, “Only buy if the market trades above a certain level” which confirms the resumption of the uptrend. Or, it could be a Limit order which says, “Buy only if the market trades down to a support level”, defined by a moving average or Fibonacci level or old highs, etc. There is no one right way to do this. However, the precise entry trigger point has to be integral to the other features of the overall trading method, including planned risk in the trade. The entry point rules of the method, by necessity, will determine the stop loss point and consequently planned risk in the trade. The two go hand in hand.