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We have a quick question here from a new subscriber asking whether it’s possible to find entries for your trades without using technical analysis methods. So first of all, thanks for the question.
Now looking at the answer to the question, we can look at it from two different scenarios. On the one hand, we have a dominant sentiment for a particular currency pair in place, maybe due to events or news that has already happened and then the other scenario is where we have or get a massive market moving sentiment shift coming across the wires, that instantly creates a trading opportunity.
Now, in the last example, there will often be very little time for you to react, right. So if it’s a massive sentiment shift, you will want to just jump into the trade as soon as possible and basically ride it out for a couple of pips to the output to the downside.
In those situations, you won’t have the time to draw in your, you know, support and resistance levels and your trend lines and look at your pivots to find entries, etc. In those cases, you can just jump in immediately, because the enterprise doesn’t really matter all that much, you know that it’s going to be very market moving, and it’ll continue to go up or go down.
Now what you could do is, you know, if you want to try and get a better entry, you could decide to drop down to a smaller timeframe, maybe like the M5 or the one minute and see if you can get a pullback. You can enter from you know, a small little pullback without jumping in at the highs. And but of course, if the news is very significant, you might not get that opportunity to find an entry.
However, immediately after you do jump in, let’s say it is at market, you shouldn’t just be holding it for the sake of holding it right, so after jumping in, what you want to do is you want to quickly evaluate your technicals after you’ve entered, so quickly find possible target areas and an area for your stop loss on the chart, so you might enter without, you know, without getting a technical entry, but it will be very prudent for you to once you’ve entered without it. By jumping in at the sentiment news to still do your technical analysis after your entry by finding those great spots where you can take some profit and expecting the Fast Money to get out of the trade.
Now, when you have a sentiment on the pair, based on news that has already happened, you know, or an event that has happened the day before et cetera, those type of trades, so let’s say for example you’re trading the Aussie/Yen during the London session with an overall risk on tone but the risk tone started the day before and it’s just continuing onwards in today’s session, for those type of trades you could obviously jump in, you know, in line of the sentiment if you’re a very aggressive trader. But why would you not use your technical tools in those scenarios to help you get a better entry and a better exit, right.
So if you know what the direction is, or in which direction you should be trading, the technical analysis tools are so much more effective, and it basically allows you to get great entry and great exit locations on the charts if you know what to look for. Now, we would advise, obviously keeping it as simple as you can, sticking to your basic technical tools like support and resistance, trend lines, pivot levels, using your ADR, maybe moving averages even, those type of technical tools that are easily understood, they’re easily applied and fits into most of the technical strategies.
So I know that was a long way around your question. So yes, you can take entries without technical analysis if it’s from a big sentiment shift, you can just jump in on the news, but after the entry is taken, it’s always best practice to conduct your normal technical analysis, find those great levels where you can take off your trade at the high probability areas.
And of course, if it’s a normal, just a normal day trade with the sentiment that’s already occurred, it’s always gonna be best practice for you to try and find the the very best entries and exits you can by using those technical tools in advance.