The entry point is inaccurate; no matter how much stop loss you carry, it’s useless.
Many people ask me: Why do I frequently hit stop losses despite having set them and holding a small position?
Where exactly is the problem?
The answer is quite simple: the entry point is fundamentally wrong!
To put it bluntly, if your entry point is not accurate, no matter how small your stop loss is or how light your position is, regardless of how much risk control you implement,
the end result will always be the same: continuous account drawdown and increasing loss of confidence.
So how do you find the 'right entry point'? It's not about feeling or emotion,
but about systematic signal confirmation!
Let’s discuss an executable entry signal judgment process:
Step 1: Direction Judgment
First, look at the larger time frame to confirm the main trend direction.
For example:
Daily, 4-hour level: determine if the main direction is bearish or bullish.
Moving Average System: Check if the price is above or below key moving averages like MA60, MA120, etc.
MACD, RSI, Volume: Confirm the current market momentum strength.
Purpose: Avoid trading against the trend!
[Step 2: Key Position]
Wait for the price to return to a key area, such as:
Previous highs and lows
Important moving average positions (such as 4H MA60/MA120 resistance or support)
Historical volume concentration areas
Support and resistance levels, upper and lower bounds of the range
Purpose: Bring the entry point down to the 'right position to act,' avoiding blind chasing of price up or down.
Step 3: Pattern Confirmation
When the price reaches the key position, do not rush to trade!
Check if the candlestick pattern provides an effective signal:
Look for bullish or bearish reversal patterns. Look for false breakouts/breakdowns. Look for spikes, long shadows, and volume reversal signals, among other typical selling or buying signals.
Purpose: Confirm the market’s true intention at the key position—whether to continue or reverse.
Step 4: Multi-Timeframe Resonance
Ideally, lower time frames (15 minutes/30 minutes) should also start showing opposing signals.
For example: If the 4-hour chart is bearish, the 15-minute candlestick should also show a reversal pattern.
Purpose: Reduce entry risk and increase signal win rate.
In simple terms: No signal, no trade. Not positioned, don’t shoot.
In true trading, it’s not about who places the most orders or who is the fastest,
but about who can endure, who can wait,
who can achieve: 'Don’t trade unconfident positions, only trade high-probability signal positions.'
