I have received a few emails from fellow traders asking me, “What if I miss the big move?”
In this case, we need to find the next best entry.
Before finding the next entry, we should really go through the trading plan once.
1. What is your bias?
In other words, which direction are you trading? Long or short?
Is the reward worth the risk? This is part of your risk management strategy.
Know the timeframe that you are trading. Are you trading for intraday, a swing that last 3-4 days or a long term trend.
Eg. If we are trading a scalp, surely that will mean we will not be adding on to the position once we have entered.
4. Support, Resistance and Target Price
This can be part of your risk-reward. But, we do need to trade knowing what are the possible obstacles for us.
Having considered the trading plan, let’s use EUR/USD as an example.
From the 5min EUR/USD chart below, we can see that there is a strong move that starts at 8am and it goes from 1.388 to around 1.396
during the period highlighted by the 2 white bands.
As with all trading, we do not know what the future holds; so we should ignore the breakout above 1.396
Knowing that we may have missed a move here, one way is to wait for the next best entry.
In this case, I will seek the Daily Chart for guidance.
From the Ichimoku Daily Chart below, 2 things that I am looking for.
1. Support and Resistance levels
In this case, the first move on the 5min chart translate into a doji on the Daily chart and it happens to bounce off the support at is a support at 1.395 (near the Daily Chart Tenkan sen).
When I am looking at the Daily Chart, my bias is bullish. We can see from the Tenkan sen that it is very steep which suggest a strong bullish move.
Switching to the 5min chart, we can see that the EUR/USD is hitting resistance at around 1.396
In this case, we can see that on the 5min chart, as it gets near to the resistance level, EUR/USD starts to trade within a range; a suggestion that it may attemp to break the resistance.
And in this case, that will be my entry with a stop loss at around 1.394 .
The above are just some thoughts. We are constantly trading our beliefs or bias of the market.
The truth is, Â we don’t really know what will happen next.
In my case, my gut feel is that US govt. will have QEII and USD will fall further. The EU, will not clash with the US govt. at his point in time, so it is unlikely EURO will fall a lot.