The long and short directions are confirmed at the large level, and how to enter
After confirming the trend at a larger scale, entering the market at a smaller scale is the most common logic of trading with a macro perspective and micro execution. When choosing to enter at a smaller scale, two points should be noted:
1. It should not be overly complex. Smaller scale market movements are fast, and if the entry method is too complex, it requires various conditions to be filtered, which can easily lead to missed opportunities or mistakes.
2. It should not be overly aggressive. An overly aggressive entry method at a smaller scale will result in more stop losses and consecutive errors, which is not conducive to the execution of trades. For example, if the trend is at a 1-hour level, entering with a reversal candlestick at a 5-minute level may offer a large reward-to-risk ratio, but the 5-minute reversal candlestick appears too frequently, with poor stability, leading to many stop losses and making it difficult to execute.
Having established the two major premises above, I will now explain three of the most commonly used methods for entering at a smaller scale.
Please note that all the examples I provide below are based on a 1-hour scale as the larger cycle and a 5-minute scale as the smaller cycle.
Method 1: After the larger cycle establishes the direction, enter on a smaller cycle when a pattern break in the same direction occurs.
The left side is the 1-hour candlestick, and the right side is the 5-minute candlestick.
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In the left 1-hour candlestick, after the market has significantly dropped, establishing a bearish trend, look for opportunities to enter during the correction. When the market tests the upper resistance level, switch the chart to the 5-minute scale. On the right side, at the 5-minute scale, a downward pattern break occurs, enter to go short, and set the stop loss above.
Method 2: After the larger cycle establishes the direction, enter on a smaller cycle when a trendline break occurs.
(The translation is cut off as the original text was also incomplete.)Please find the translation below:
"Observe the illustration.
The trend in the chart on the left is the same period as the one on the top chart, with the left side being the 1-hour timeframe candlestick, and the right side being the 5-minute timeframe candlestick.
On the left side, after establishing a bearish position at the 1-hour level, look for opportunities to enter during the pullback. When the market tests the upper resistance level, switch the chart to the 5-minute level, connect an uptrend line on the 5-minute chart, and enter a short position when the market breaks through the uptrend line, setting the stop loss above the high point.
A reminder to everyone, in forex trading, you can focus on the small-scale trend breaks during the European or American sessions, as these two periods are the nodes where the market tends to explode, often resulting in a higher success rate of breaks.
Method 3: After establishing the direction in the larger timeframe, use the crossover of moving averages in the smaller timeframe to enter.
Observe the illustration.
The trend in the chart on the left is the same period as the two charts above, with the left side being the 1-hour timeframe candlestick, and the right side being the 5-minute timeframe candlestick.
After establishing a bearish position at the 1-hour level on the left, choose an opportunity to enter during the pullback. When the market tests the resistance level, switch the chart to the 5-minute level, add two moving averages on the 5-minute chart, and in this case, EMA25 and EMA10 are used. When the two moving averages form a death cross, enter a short position, with the stop loss set above the high point."Just a reminder, if you opt for a small parameter moving average to enter the market, it will be more aggressive. A larger parameter moving average will be relatively conservative.
A brief summary:
For the same one-hour trend, we have used three different entry methods from the 5-minute level, all of which are quite common and practical. You can choose the one that best suits your trading characteristics.
Finally, there are a few minor points I'd like to discuss with everyone.
1. How to choose time frames for different scales? In practice, the selection of time frames for different scales requires a certain span. If the time frames are too close, the candlestick patterns will be very similar, making it difficult to achieve a small stop-loss with a large profit-to-loss ratio.
The most commonly used combinations of scales are daily and 1-hour, 4-hour levels with 15-minute, and 1-hour with 5-minute levels.
2. After choosing the entry method for the smaller scale, to confirm its compatibility with the larger scale, we need to conduct backtesting or simulation testing. Only after confirming its effectiveness through testing should it be used in actual trading. Never rush to use it without proper testing.
3. Multiple entry methods can be chosen simultaneously for smaller scales. For example, after the larger scale confirms the trend, when the smaller scale has retraced to the right level, choose two from the three entry methods mentioned above. Whichever method gives the signal first, enter with that method. Once entered, automatically abandon the other entry method.
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