2. ENTRY Techniques for trend and trend continuation trades

Trend continuation trades occur when a trend has been established and you want to enter a transaction in the direction of the trend or add to a with the trend transaction that you may already have entered.

2.1 The 5 option approach

Put yourself is this situation. Positive news has come out in favour of the US Dollar and immediately the EURUSD starts to trend downward. It has already broken through initial support area and is starting to make new lows. The next support area in 40 Pips away. How do you join the trend?

There are 5 options:

1. You do nothing: You say to yourself that the price has already moved too far from the breakout point and it is too late to enter. The danger of this is that you will sit and watch the price trend for another 100+ pips.
2. You enter blindly where the price is right now. The advantage of this is that you know that you are in the transaction if it runs another 100+ more pips.
3. You wait for a small retracement and enter when the price bounces off upper resistance. The danger of this is that the price may not reach your upper resistance and you miss the entry or the price moves 40 pips before making its first retracement.
4. You wait for a small retracement and enter once the price starts making a new low again. The danger of this is that the price moves 40 pips before making its first retracement.
5. You wait until the next level of support and the enter the transaction

The above situation is one Forex traders find themselves regularly.

One solution to this can be:

• Use option 2 and enter the trade immediately using only 50% of the normal amount of lots that you would trade in terms of your risk and money management strategy.
• Try to add the next 50% on a possible retracement (if a retracement does occur)
• Add the next 50% in a new low after a possible retracement (if a retracement does occur and you missed entering at the top of the retracement.
• If the price trends directly to the next support price level add the 50% that you have not used when that support is violated.

This approach allows you to participate in the trend and also to add to your position in accordance with your risk and money management strategy.

2.2 The Fractal indicator

The fractal indicator is an indicator that merely puts a small arrowhead on a candle high with 2 lower candles to the left of it and 2 lower candles to the right of it.

Alternatively the indicator puts a small arrowhead on a candle low with 2 higher candles to the left of it and 2 higher candles to the right of it.

It is therefore merely identifying short term high and lows all the time. These are however quite handy in a trending market. You would merely enter a sell when the price makes a lower low than the previous Fractal low as show in this example.

You are however effectively merely entering on new lows in a down trend or on new highs in an uptrend.