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If you’re not already familiar with second-entry trading, you’re missing out on some of the best entry opportunities available in trading. Second entries are an important part of price action trading and work in any market and on all timeframes. I prefer to trade on tick or volume charts, and these entries work on them just as well as they do on any time-based chart. You should also look for second entries on the daily, weekly and monthly charts, because you can find them there too.
If you don’t already know what a second post is, you’re probably scratching your head and wondering exactly what I’m talking about. Before attempting to describe a second input, I’ll discuss some of the theory behind why they tend to work so well. If you have been trading for a while, you probably already know that the market tends to move in pairs. In other words, prices will make a leg, then pull back and typically form a second leg that is somewhat equal in length to the first leg.
These “two” movements happen over and over again throughout the day and at different time levels. If you need proof, just study some charts in depth, and I think you will then agree with me that the market moves in pairs over and over again. Now that you know and understand that this is a natural part of any price movement in the markets, the next thing to understand is that any time the market tries to do something twice and then fails, it is likely to move strongly in the future. another address. . This is what makes second-inning opportunities work so well in my opinion.
Describing a second entry isn’t easy, but I’m going to try to put it in very simple terms so you can understand this entry technique. When trading second entries, look to take them “in trend” or at major turning points. There are actually many other clues you should also look for when trading turning points in the markets, and that would take up too much space for an article, so for now, we will concentrate on taking only trending second-entry opportunities. After all, it is the traders looking for tops and bottoms that really help these entries perform so well.
If the market is trending up, every time a new high is created, even if only for a tick, the count must start over. Suppose that prices have just made a new high and are now pulling back with several bars making lower highs and lower lows. At some point, the retracement will stop and you will have a bar that will mark higher than the previous bar, so this is the first attempt for prices to start the original uptrend again. This is your first entry or the first time prices have risen after the start of the pullback. Prices could break out from here and continue the original trend, but if they fail to make a new high and then pull back again and start making lower lows and lower highs, then we would start to expect a second entry or second chance. for the trend to start moving up again.
If the second pullback also stops and prices can retrace one tick higher than the previous bar, then that constitutes the second entry, or a second chance to get back on board with the uptrend. This really is all there is to a second entry, but they work extremely well for a couple of reasons. First of all, if you get a second long entry, that means the market obviously tried to go down twice and failed, so the odds are in your favor that prices will now manage to go the other way. You’re probably very familiar with double bottoms and double tops, and that’s why they tend to work so well, and this is a similar type entry, except that the two pullbacks don’t necessarily have to form a double bottom or double top. Second, when the market begins a second pullback, many traders assume the uptrend is ending and are adding short positions, trying to top out. When their short entries quickly fail, and the market starts trending up again, these traders get caught on the wrong side of the trade, and quickly start buying to cover their short positions and limit their losses, and this short covering gives it trades it for additional fuel and pushes it further to the long side.
Most trends will go further than you expect, so trying to pick highs and lows is a very risky trade, which is why second entries work so well. Too many players are trying to pick a max or min, justifying it with the fact that they can walk away with only a small loss if they mess up. Following the trend will take your gifts and add them to your trading account. One of the best places to find second entries is on a pullback that stops near a 21-bar EMA. I normally trade on a 2000 tick chart, and one of the few things you will find on my chart is a 21 bar EMA, and that is where most of the best second entries usually form on my trading chart.
The most important part of counting when looking for second entries is to remember that you start the count over again at each new high in an uptrend and each new low in a downtrend. You should always start the count over, even if the new high was only for a tick or two. If you are trading in a downtrend, simply reverse the process as I described above for second entry longs. I usually place a stop entry order one tick above or below each bar once I start looking for a second entry. If the trend is up, I prefer to see a full bull bar before placing my entry order as well. If prices don’t go up and I am stopped at the completion of the next bar, I simply move the stop down and keep doing this until I am stopped in the market, or until I feel the market may have gone too far. .
Pull out your favorite trading charts and study them closely. Mark the second entries and learn how to place them on your charts. Once you figure out what they look like after the fact, you can start watching them in real time. By adding second entries to your trade, you will gain a slight advantage over most other traders. In fact, I talk to many long-term traders who often don’t know or understand what a second entry is and why they tend to work so well. Go study some charts today and learn this technique so you can add it to your trading arsenal.