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Nial Fuller

NIAL FULLER
Professional Trader, Author & Trading Coach

Pick The ‘Perfect’ Trade Entry Point For Lower Risk & Higher Reward

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By in Forex Trading Strategies By Nial Fuller Last updated on | 38 Comments

The ideal trade entry is one that allows for good stop loss placement and a substantial risk / reward potential. Easier said than done, right?

Well, maybe not. Whilst these “perfect” trade entries may not be frequent, it doesn’t mean they are “hard” to spot. It just takes some training combined with screen time to learn how to find them.

There are essentially three process that I use to find the ideal trade entry. Here, in a nutshell, is what I do every time I am looking for a new trade entry, this is how I think and what I look for:

The 3 keys to finding the “perfect” trade entry:

The easiest way to do this is to first look for any really obvious price action signals on the daily chart time frame. The daily chart time frame, traded in an end of day manner is my favorite way to trade. I am looking for really obvious signals and patterns that “stick out like a sore thumb”, and once you get familiar with the setups I teach, these aren’t hard to spot.

Next, you want to look for confluent factors for the trade that back up the signal. So, you are sort of “reverse engineering” the trade, if you will. You spot the signal, then, you start looking back in time on the chart to see if the signal bar lines up with other key levels or has formed after a pull back within a trend or has some other type of confluence with the chart.

Essentially, you want to line-up as many supporting factors as possible if you want to find the “perfect trade entry point”. The last thing you want to do, if you’ve found a signal that has confluence, is look to see if you can “refine” the entry so that you increase the risk:reward potential of the trade (this is a more advanced concept that whilst isn’t “necessary” can improve risk:reward. I get into this more in-depth in my professional trading course).

Note: Whilst there really isn’t a “perfect” trade entry, we can still try to look for trades that have the most “weight” or confluence behind them.

A brief breakdown of the 3 key pieces of the “perfect” trade entry are:

  1. Find the signal, pattern, level to trade, this is somewhat obvious, but it’s also a skill that needs to be developed and refined. For this tutorial we will use pin bar entry signals and tailed bar entry signals.
  2. Look for entry filters and confluent factors; things that back up the trade such as a strong trend, key horizontal support and resistance levels, 50% swing retracement levels other past signals (event areas), moving averages and more.
  3. Entry tweaks and tricks; such as the 50% tweak retracement entry of the signal bar itself, or simply consider a nearby key level for a more optimum entry point, that allows for better stop placement and larger target.

My typical daily routine to find that “perfect” trade entry:

After I wake up and eat a healthy breakfast (and yes, sometimes I eat Vegemite) and do my morning exercise, I will flip on the charts and see what happened after the U.S. session closed, remember, I am focused on the New York close charts. Since I live in Australia, when I wake up it is in between the U.S. close from the previous day and the European open, so I have a nice time to observe the daily charts in Forex, Stock Indices and major commodities and see what happened before they really get moving again in Europe. Or, if I am looking at my local Aussie markets, since it’s morning it’s the perfect time to enter a trade, IF one is there.

My goal is to scan quickly through my favorite markets to trade and then look for obvious trade signals / patterns that provide me with an edge in the market. If I find one, I will then filter that trade by finding reasons that back up the trade or that make sense with the surrounding market structure. At this point, I am also seeing if the trade maybe doesn’t make sense? Just because I find a potential signal doesn’t mean I always trade it. If a signal has little to no supporting confluence then I will probably not trade it.

Lastly, if I find a signal that meets my criteria and makes sense in the surrounding market structure (confluence), I will then find the best and most logical way to enter it with the goal of best stop loss placement and a high potential risk reward.

Let’s go through some examples:

Example 1:

In the chart below, I saw a very obvious daily chart EURUSD pin bar sell signal that looked like it had a lot of confluence behind it, which we will discuss in the next chart. For now, note that the tail of this pin bar was CLEARLY sticking out from the nearby pars, indicating a sharp reversal and rejection of that price area and implying price might move lower in the coming days. I didn’t have to search long or hard for this signal, it literally “jumped” off the chart to me:

In the next chart, we are checking to see what supporting “evidence” this pin bar signal has. In this case, there is definitely enough evidence to warrant a trade entry. As per the chart below, the market was in a multi-month downtrend and the signal had formed after a pull back to resistance, and a key resistance zone at that. The signal itself was also well-formed and obvious, in my mind this trade was a “go” and all we had to do was set it up, pull the “trigger” and go watch a movie or play some golf or whatever you like to do, just don’t stare at the trade all day after it’s live.

Next, let’s look at the zoomed in view of the above pin bar. We are focusing now on the entry “tweak” as well as seeing if we can improve the risk reward potential on the trade. Notice, in this trade, we could have entered near the 50% point of the pin bar for a much improved risk reward ratio. Realistically, an exact 50% entry on the pin would have been difficult as price just barely touched that level before moving lower again. However, you could still have entered on a retrace of the pin somewhere under that 50% point and with a stop above the pin high. You would have a logical stop placement and a strong 3R to 4R profit potential on the trade.

Example 2:

In the example below, we are looking at the daily SPI 200 (Australian Stock Index) chart. Upon glancing at this chart the pin bar circled below quickly caught my eye. It clearly lined up with an overhead level on the daily chart time frame. The tail on this pin bar was clearly sticking out and showed a sharp reversal in price.

The chart below shows a weekly chart view of the above daily chart. Often, I will check the weekly chart when I find a trade on the daily or 4 hour, to see how that signal makes sense in the context of the longer-term time frame, or if it makes sense at all. In this case, the pin bar on the daily above, formed at a very powerful key resistance level / event area on the weekly chart, as we can see below. It also formed in-line with the downtrend in place on both the daily and weekly charts.

Finally, we see a zoomed daily chart of the pin bar signal we are trading. Note that no retrace / tweak entry was possible here but this trade still had a good 2R Reward potential since the next support was not until quite a ways down as you can see below. Trades like this that form at a key level / event area and have the trend behind them and make sense on the daily and weekly, often lead to fast and big moves…

Example 3:

In the next example we are looking at a couple of bearish tailed bar signals that formed on the daily Crude Oil chart. You will quickly notice a very strong downtrend was in place and that these bars formed just under a key resistance level after price broke and closed under that level just prior. Whilst these signals may not “jump” off the chart at you like the first two examples, given the momentum behind the sell-off in this market they would have been obvious setups to the trained price action trader.

Once we zoom out a little more you can clearly see the magnitude of that overhead level as well as the trend that was in place. These strong pieces of supporting confluence made this trade a virtual “no-brainer”.

A zoomed in view of the signal on the daily chart shows us that even with a stop loss just above the first tailed bar high (and beyond the level) there was still a huge potential risk reward on this trade because this market was truly in a runaway trend. These types of trends are the best for pyramiding into positions and making a big profit. Notice on just one position here you could have easily grossed a 5R profit. Not a bad payday.

Conclusion

I hope that the main thing you take away from today’s lesson is that the best trades are ones that form with multiple supporting factors. In all of the examples above, the trend was really obvious and the signals formed at a key level in the market. This stuff should not be difficult once you gain the knowledge and understanding of what you’re looking for. However, there is an “art and science” to it that takes some training, time and gut feel to get really good at.

I want you to remember that you’re looking for an “intersection” of a signal and a level or a signal and a trend or even just a level and a trend as in the case of a blind entry. Essentially, what we are doing here is trading like a sniper by waiting for the right pieces of evidence to align and give us the green light to pull the trigger on the trade. All of this becomes easier once you understand how to read the footprint of money on the chart, i.e. the price action. It does take passion and commitment though, I have found as I’ve gotten older that the charts have made more and more sense to me, even the randomness within them.

You have to truly to be in this for the ‘long-haul’ if you want to succeed at it because trading is the ultimate test of the self. The market WILL expose all your human flaws and how long it takes you to truly start making consistent money at trading or if you do it all, depends mostly on how fast or if you can accept these flaws and correct them. Whilst this part of trading is not easy, there are people who can help you; other traders who understand what you’re trying to do and what you’re going through.

Learn To Trade The Market is a collective community of 20,000 + members who are all on the same page and who all have the same end-goal of trading success. My members are following the trading ideologies, processes and concepts discussed in this article and that I expand upon in my advanced course. This is why I created Learn to Trade The Market, because it allows you to “look over my shoulder” via my daily trade setups newsletter where I implement the routine described above and combine that with the core teachings of my course.

Please Leave A Comment Below With Your Thoughts On This Lesson…

If You Have Any Questions, Please Contact Me Here.

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About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 20,000+ students since 2008. In 2016, Nial won the Million Dollar Trader Competition. Checkout Nial's Professional Trading Course here.
  1. Medi September 14, 2019 at 5:29 pm

    You tha God sent!

    Reply
  2. NGUYEN QUOC THANG September 14, 2019 at 1:28 pm

    Pls support me to explain more about ” Event area ” in the line ” Retrace Entry Back to an Event Area or Prior PA signal.

    Thank you
    THANG

    Reply
  3. Mahmudul Hasan September 14, 2019 at 1:32 am

    Super Nial bro…..

    Reply
  4. Diário de um Poupador March 5, 2018 at 1:32 am

    Hi, i am a brazilian guy who trades for years. I pause my trades during some years, and i came back about 2 months ago. I’ve been trying a strategy with short take, and it has given to me a lot of profits. I am trying to make my mind strong to ignore the market’s movement after i book profit. You have said a very right thing here: the market always makes a retraction.

    This article was very good, thanks. Keep it that way. God bless you.

    Reply
  5. Solomon Olusegun Oyeniyi December 13, 2017 at 9:24 am

    Thank you for this article.

    Reply
  6. GANDUS December 4, 2017 at 6:10 am

    Great always to hear you big brooother Nail. God bless you. timely article for me. love

    Reply
  7. Noor Azman Abd Aziz November 26, 2017 at 2:10 am

    Nice and very interesting. This article answer the questions why i always close trades with losses while actually I have been profitting during the trading session.

    Reply
  8. Sboniso Malambule November 24, 2017 at 6:22 pm

    ive bee reading your lessons im impressed

    Reply
  9. Azmi Yusoff October 17, 2017 at 2:52 pm

    Interesting article. This happen everytime. The idea of wanting to wait a little more time may cause us to lose what is supposed to be a profit instead.

    Reply
  10. Ayanda Mabuza September 18, 2017 at 10:56 am

    reading such artecles really opens my mind.Thanks Nail

    Reply
  11. Roy Peters September 1, 2017 at 2:39 am

    This happened to me recently on Eurgbp. Up 200 pips and thought it’d go higher. Next day market came down and I booked only 40pips!
    I learn a big lesson.

    Reply
  12. Rafari July 31, 2017 at 1:29 am

    ok, its been almost 2 years since I start to learn how the market move. I can say most of your articles give me a vision about how to, what to do and don’t. It’s cool because I start move to learn draw some major snr, I got stuck on making it, but your articles show me some clever way to draw “a key level” and some short term. I’ll try my best to practice it everyday !!!

    Thanks Nial, You’re Awesome !

    Reply
  13. kgothatso July 28, 2017 at 6:00 pm

    U ar really a genus.sir u teached me that i should take a risk than to lose the chance **#great things come to those who hustle (lovely)$$$$$

    Reply
  14. Alan Gillanders June 25, 2017 at 3:25 am

    Hi Nial,
    Thanks for the lesson. This has been my problem for some time. Greed. Always waiting to take more with a small investment. My profits evaporate and majority of times end in a loss.
    In the last 6 weeks I have been taking the small profits. 100 – 200 points instead of trying to get 500-1000 points. seems to be working ok. Thanks again

    Reply
  15. oluwatosn Matthew June 23, 2017 at 5:50 pm

    That’s a good trading guide. Thanks nial.

    Reply
  16. Ages Justice June 22, 2017 at 5:40 am

    Keep it up Mentor. God bless you more!

    Reply
  17. Louis June 21, 2017 at 11:43 am

    This is exactly what was missing from my trading. Realistic exit plans. Thank you Nial.

    Reply
  18. endurance oki June 21, 2017 at 8:05 am

    thank you sir for your well prepared article. Im a victim of this very situation , i’ve almost hit my profit target then i said i should let the profit run but to my very face , the profits were evaporating until i closed the trade .

    Reply
  19. DAVID SHUBE June 20, 2017 at 7:48 pm

    Thanks Nial, booking profits on-time is right, cos too much emotional traits is involved when one realized that the trade is going to retrace unexpectedly.

    Reply
  20. PEERALLY June 20, 2017 at 6:21 pm

    Thank you, Nial.

    Reply
  21. Kate M June 20, 2017 at 6:49 am

    Thanks Nial, way to go. You keep writing evolving lessons like these, Ill always have something to learn. And again an opportune time to write this particular article, I think you are the Yoda of trading:)

    Reply
  22. Lucas Obiora June 19, 2017 at 9:07 am

    Thanks Nial, that’s an eye opener to me, I have that problem of letting profits run into losses, thank you very much for the article.

    Reply
  23. Kay June 19, 2017 at 8:49 am

    Thank you Nial, well explained and organized article. Definitively help me to prepare my Profit plan. Regards

    Reply
  24. smg June 19, 2017 at 3:17 am

    Thank you

    Reply
  25. richadi36 June 19, 2017 at 2:07 am

    Thanks Nial. I really got immense knowledge about booking profits.

    Reply
  26. Suleiman Bhadmus June 18, 2017 at 11:14 pm

    Amazing,am definitely going to include all this point in my trading plan. Though am still on demo, but what have learned from this article in very key to a successful trading.
    Thanks a lot Mr.Nail Fuller.

    Reply
  27. Matt June 18, 2017 at 5:25 pm

    This happened to me last week. Was up 700 proffit and closed with 700 loss because i had such an attachment to what i thought was a fullproof longterm move in one direction so i wanted to ride the waves but it looks like it wasnt the long term move in that direction i thouht it was.

    Reply
  28. akhtar butt June 18, 2017 at 4:44 pm

    Hi, Dear Nial Fuller, , excellent, well-explained with reality and experience. Thank, cheer

    Reply
    • Bebe April 30, 2019 at 7:57 pm

      Excellent article,Thanks Nail

      Reply
  29. Akpos June 17, 2017 at 6:46 pm

    Nice….this has been my bane in trading. Not booking profit….

    Reply
  30. John Promise June 17, 2017 at 6:02 pm

    Thanks Nial. My mentor.
    Remain blessed.

    Reply
  31. Thendo June 17, 2017 at 4:58 pm

    Thanks Nial.. great advise. Am looking forward to not closing or closing when the trade goes against you but hasn’t hit your stop loss…

    Reply
  32. Luis June 17, 2017 at 12:20 pm

    Thanks so much Neil as always, great article!, mm please i have a question, what about the case that all the other trading books and gurus says about let profits run until at least 1:2 Risk reward ratio? , because they say if i close before that 1:2 im cutting my profits and that can damage me in the long run! , but in the real life im bored to wait sometimes for a 1:2 and when im at 90% to achieve that profit target the markets turns down eliminating all my profits and making a loss for me, but when i book the profits i see my account growing, what you can reccomend me about that?.

    Reply
  33. Bruno June 17, 2017 at 10:48 am

    Before reading the whole article, I’m writing this! Just the header alone struck the cord. Toy, Nial, are a mind reading mentor! I’m at that stage in my trading where my edge is consistently delivering profits! But, yes, most times, these profits evaporate. Alot is happening around the political and business world and price is fluctuating between these events. Yes, price still does was it’ll do, but the whipsawing is alarming! I can’t say enough how soothing this article is to me because I make sizeable % of my Acct only to watch some diminish or disappear, even into losers.

    Thank you for this article.

    Reply
  34. Mavhungu Lufuno June 17, 2017 at 9:14 am

    Amen

    Reply
  35. Elpadrino June 17, 2017 at 4:54 am

    Thanks Nial #Legendary

    Reply
  36. Alin June 17, 2017 at 4:20 am

    I am one of those loosers who do not book much profits on the trades, because I’m setting
    way too large TPs. Thanks for the posting!

    Reply
  37. Shankara Motay June 17, 2017 at 3:59 am

    Thank you very much

    Reply
  38. Rongsquare June 17, 2017 at 12:44 am

    Amazing thank you Nail

    Reply
  39. Mike Coe June 16, 2017 at 11:27 pm

    Your articles just keep getting better and better, Nial! Great stuff! Thank you very much.

    Reply
  40. Siyabonga Mkhize June 16, 2017 at 11:10 pm

    Powerful thank you sir

    Reply
  41. KRISTOFA OKENTA June 16, 2017 at 9:37 pm

    Good Teaching As Always.
    Thank you For Sharing Your
    Heart With Us.

    Reply

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