When Is The Best Time to Enter A Forex Trade?

The best time to enter a forex trade depends on the strategy and style of trading. The three discussed below are popular approaches.

1. Trend channels

Trendlines are fundamental tools used by technical analysts to identify support and resistance levels. When the price shows a clear higher high and higher low movement, it indicates a prominent uptrend. This enables to determine a trading bias of buying at support and taking profit at resistance. Once price breaks these key levels of support and resistance, traders should then be aware of a potential breakout or reversal in trend.

2. Candlestick patterns

Candlestick patterns are powerful tools used by traders to look for entry points and signals for forex. Patterns such as the engulfing and the shooting star are frequently used by experienced traders.

As you can see on the chart, the hammer formation is circled in blue. It is known that the hammer signals potential reversals however, without some form of confirmation the pattern may indicate a false signal. In this case, the entry has been identified after a confirmation close higher than the close of the hammer candle. This gives a stronger upward bias to the trader and endorsement of the hammer candlestick pattern.

3. Breakouts

Using breakouts as entry signals is one of the most utilised trade entry tools by traders. Breakout trading involves identifying key levels and using these as markers to enter trades. Price action expertise is key to successfully using breakout strategies. The basis of breakout trading comprises forex prices moving beyond a demarcated level of support or resistance. Due to the simplicity of this strategy, breakout entry points are suitable for novice traders.