When you trade forex
, just like every other asset you trade, it is virtually impossible to time your entry into a currency pair
correctly which means that after you go long it usually keeps dropping before it rebounds and after you go short it keeps in rising. That is normal and should not concern you at all.
As long as you have a solid trading
strategy in place which produces good results for you there is no reason to make any big adjustments. One minor strategic change which is advisable is to stagger
your entry levels in a support
zone.Two benefits of a staggered entry
Here is an example
- You minimize the risk as you do not place one single entry
- You maximize your profits as you do not place one single entry
Let’s assume that you want to go short
on the GBPUSD
at 1.5850 as your technical analysis
points to a correction and you have identified a resistance zone
which starts around 1.5850 and stretches to 1.5900.
Instead of placing one single order for 1.0 lot at 1.5850, you stagger your entries across the entire resistance zone which reduces risk as well as increases profits.Here is what a staggered entry may look like
- 0.10 lots at 1.5850
- 0.10 lots at 1.5860
- 0.10 lots at 1.5870
- 0.20 lots at 1.5880
- 0.20 lots at 1.5890
- 0.30 lots at 1.5900
You can see how you spread the order around and reduced risk. Those who placed a 1.0 lot order at 1.5850 faced a $500 floating trading loss
when the price hit 1.5900 while those with a staggered entry faced a floating loss of $180. That’s a difference of $320 or 64%.
A staggered approach does not only reduce risk, it also increases profits. Traders who place a 1.0 lot order at 1.5850 faced floating trading profits
of $500 when the price reached 1.5800 while those with a staggered entry faced floating trading profits of $680. That’s a difference of $180 or 36%.
You see how you can use your preferred trading strategy, but with a staggered approach you were able to reduce your risk by 64% and increase your profits by 34% which is a 100% improvement to your already trusted trading strategy.Professional traders
always stagger their entries, so it is time for you to do the same.