What is a forex entry point?
A forex entry point is the level or price at which a trader enters into a trade (buy/sell). Deciding on a forex entry point can be complex for traders because of the abundance of variable inputs that move the forex market. This article will cover how to enter a forex trade and outline the following entry strategies:
- Trend channels
- Breakouts
- Candlestick patterns
When is the best time to enter a forex trade?
The best time to enter a forex trade depends on the strategy[1] and style of trading[2]. There are several different approaches and the three discussed below are popular approaches and are not meant to be all of the methods available. Join the DailyFX analysts on webinars[3] to see how each of them approaches the market.
Discover the benefits of using entry orders in forex trading[4]
Forex Entry Strategy #1
Trend channels
Trendlines are fundamental tools used by technical analysts to identify support and resistance[5] levels. In the example below, the price shows a clear higher high and higher low movement indicating a prominent uptrend. This enables to determine a trading bias[6] of buying at support and taking profit at resistance (see chart below). Once price breaks these key levels of support and resistance, traders should then be aware of a potential breakout or reversal in trend.
Forex entry strategy based on trend channels, weekly USD/ZAR[7] chart:
Forex Entry Strategy #2
Candlestick patterns
Candlestick patterns[8] are powerful tools used by traders to look for entry points and signals for forex. Patterns such as the engulfing[9] and the shooting star[10] are frequently used
