I’m going to [...]]]> By now, everyone knows the well known saying “95% of traders lose money”. It’s printed on almost all websites selling a forex product. They want you to believe that if you buy their course, you will be one of the 5%. While it may be true for some courses, the majority are worthless.

I’m going to illustrate a very simple method for getting into trades. We call this the 5% Precise Entry method because 95% of traders don’t enter this way. If you are already trading and you do happen to enter this way, congratulations.

Ok, here is the premise behind this method. On occasion, you may be waiting for an entry signal at a certain level which has not yet been reached. If you are absolutely sure that price will bounce at your expected level, what do you do? Most traders would wait until price has reached that level and then wait for price to turn around and then wait for a confirmation pattern or signal from a confirming indicator before they enter.

Now this may be fine if you are not sure whether the currency will bounce at that level or break through. If you’re not sure, then it is advisable to wait till price has indeed given you some sort of confirmation that it is indeed turning around. If this was the case, you would get in at a worse price than you had expected (1.2125) thereby losing a few pips in the process.

But if you’re sure there’s a 90%+ chance that price will bounce at the expected level, you can get in on that trade with laser precision at the best price. In the case above, you would enter at exactly 1.2125. But, it’s not as simple as simply entering at 1.2125.

So what method of entry do professional traders use to get in on good trades? Remember, professional traders do, what losing traders are not willing to do. This is what makes them professional. If you saw a support line where price had bounced at that level several times before, do you think there’s a chance of another small bounce next time price visits that level?

Sure! There’s a damn good chance price will bounce at least a few pips (at least 15 pips in many cases) before it may continue in the original direction.
So let’s say you spot a support line where price had bounced several times before. Now you see price coming back to that support line. What do you do? Should you wait to see if price does indeed bounce before you get in or should you get in before that? If you wait for price to confirm the turnaround, you won’t be doing anything different to what you are doing now. But if you are confident in the support line (or any other reversal point), you can afford to risk minimal pips for optimal entry placement.

Have a look at the chart below

This is not a perfect example but I’m using it for the sake of demonstration. You’ve noticed price made a swing at point 1 and then later it bounced at that exact same level again. Now you know that level is significant and you draw a support line. When price starts to head back towards that line from above, you sit up and take notice. You have a good chance of making a few pips on another possible bounce.

At this point, you’re probably asking yourself:

How do I know if it will bounce? How can I be sure it will bounce enough to give me a good few pips? If you have faith in your support level and you know that it has held well in the past, you can almost definitely expect a bounce again at that level even if price does continue past it a few minutes later.
So if you do have a good level which has proven itself in the past (doesn’t have to be a S/R level), trade the bounce.

Using the above chart as an example, the trick is to enter when you see a big red candle touching the support line. You need to get in on that trade as close to that support line as possible. The problem with 95% of traders is that they are unwilling to go long when they are staring at a big bad red candle. They have this nagging feeling in the back of their head which says “how can I go long when I’m looking at a big bearish candle”. Reluctance to take action at this precise point is what separates the professionals from the traders who tick by.

You must try and enter at exactly the point when the big red candle touches the support line. It would have made a down-tick to touch that line and that’s exactly when you need to enter. You should already have your order window open and ready to press the BUY button.

On the chart above, the candle which is currently touching the support line was a full red candle at one point. Now that the candle is complete, it has retraced a few pips and left a wick. As the big red candle touched the support line, this is the exact point you should have entered a long trade. You just cannot allow yourself to be phased by the fact that there is a big bearish candle in front of you and you are required to open a long position. Trust in your support level and you’ll see great results.

Price doesn’t always bounce heavily and give you mega profits. Sometimes, it will just bounce enough to give you 10 pips and then continue on in the southwards direction. But the point is, almost always, it will bounce enough to give you a good quick trade. Compare this with entering a long position after you have received confirmation of the turnaround. With the 5% Precise Entry method, you have several benefits. Since you’re entering a trade at the support line, your stop can be much closer. On a normal trade where you wait for confirmation, price will have moved up several pips thereby making you place your stop further away from your entry position (beyond the support line).

Next, if price was only intending to bounce 20 pips and you were aiming for 15 pips, you can easily achieve this if you entered exactly at the support line with a big red candle. Had you waited for price to move away from the support line, you may never have realized a 15 pip gain if you entered more
than 5 pips away from the best possible entry price.

I hope I have opened your eyes to a whole new way of looking at things.