Trend traders typically look for sustained breaks of these levels as an indication that the market may start to trend. ![]() The same applies when price approaches a key level of resistance and typically drops lower shortly after. Traders do not want to be holding a short position after price has dropped to the key level of support, only to bounce back higher. Price action tends to respect certain price levels for a number of reasons and being able to identify these levels is key. 2) Is there a significant level of support or resistance nearby? ![]() Oscillating indicators ( RSI, CCI and Stochastic) can be of great use to traders that focus on range trading. Certain markets, like the Asian trading session, tend to trade in ranges. Ranging markets tend to see price bounce between support and resistance to trade within a channel. Traders need to ask themselves if the market is exhibiting signs of a strong trend and whether ‘trend trading’ forms part of the trading plan. As can be seen below, even if a trader entered a short trade after the trend was well established, the trend would continue to provide more pips to the downside than to the upside. There is a well-known saying that trending markets have the ability to bail traders out of bad entries. Are there any significant economic releases that can impact the trade?Įxperienced traders know that finding a strong trend and trading in the trend’s direction, has the potential to lead to higher probability trades.Is the trade confirmed by an indicator?.Is there a significant level of support or resistance nearby?.Your Trading Checklistīefore entering a trade, ask yourself the following questions: The trading checklist focuses on each individual trade and the conditions that must be met before the trade can be made. The trading plan deals with the big picture, for example, the market you are trading and the analytical approach you choose to follow. ![]() It is important not to confuse a trading plan with the trading checklist. Maintaining a trading checklist presents traders with a list of questions that traders need to answer before executing trades. Implementing a trading checklist is a vital part of the trading process because it helps traders to stay disciplined, stick to the trading plan, and builds confidence. The video above focuses on the main aspects of the trading checklist and this article seeks to unpack further aspects of the trading checklist in greater detail.
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