The saying goes “the trend is your friend.” But relying on trends alone is not enough for trading success. Here’s a better formula.
It’s All About Environment
Simply buying into an uptrend whenever you see one is foolish. Professional traders analyze the market environment and structure to determine the current state.
Is it trending, reversing, ranging, or breaking out? Different strategies work best in each environment. Identifying the state before trading is key.
Choose Your Levels Wisely
With the state identified, traders hunt for specific price levels that align with the current structure. Key support and resistance zones, moving averages, and patterns all provide possible entry points.
Matching your entry technique to the environment maximizes success rate. A breakout entry won’t work in a ranging market, for example.
Master Entry And Exit Timing
Even with the right state and levels, the details make or break trades. Analyze candlestick patterns and volume at your levels to pinpoint excellent entries and exits.
Don’t force trades when the price action doesn’t align with your strategy. If a level fails, adapt to the new state.
It’s A Process, Not A Guess
The elite formula is environment first, then levels, entries, and finally exits. This systematic process prevents guessing and trades based on assumptions.
By evaluating the ever-changing market structure in real time, you can put the odds substantially in your favor. The trend is helpful, but environment is truly king.
