Whether you trade forex, commodities, or equities with CFI, there are hundreds of opportunities to place a trade whenever markets are open, therefore knowing what a trade trigger is and when to enter a trade is vital.
The biggest challenge is usually deciding when to place a trade and when to decide against it – the profit potential is not always equally high. A new trader must learn to evaluate each trade against certain criteria so that they can identify the right moment to place a trade in a sea of infinite trading possibilities.
A trade trigger helps you decide when to enter a trade. The first thing to be clear on when deciding when to enter a trade is your trading plan. Only enter trades that align with your trading strategy. After you have established that the market has the right conditions for your trading strategy, you need to have a specific trigger that tells you "now is the time to enter or exit the trade".
Whether the market is in an [uptrend] or downtrend, there are specific features in each trend that provide better opportunities to trade than others. For example, after the price has moved, you may wait for a pullback, or for new highs to form. If you are bearish and you think that the trend will reverse, wait for a bearish engulfing pattern. You should always look for precise events that help you distinguish trading opportunities from the overall price movements.
Key takeaways:
- A trade trigger helps you decide when to enter a trade.
- After you have established that the market has the right conditions for your trading strategy, you need to have a specific trigger that tells you "now is the time to enter or exit the trade".
- You should always look for precise events that help you distinguish trading opportunities from the overall price movements.