We all want the perfect entry, selling tops and buying bottoms. Why? Because it gives us the best possible risk to reward ratio. These type of setups allow us to afford tight stop losses and wide take profit levels, maximizing our gains. In this article, I’m going to show you how you can do just that, with a live trade that we took in our premium Trading Floor, as an example.
If you’ve been following our Telegram channel, you’ll know that ElementaryFX is an industry leader in providing quality supply and demand setups. However, this setup we took uses something even simpler: pure structure.
Right, let’s get straight into it. On the chart below, you’ll see that we have 3 lines drawn, but we want to focus on only one; the one in the middle. Why did we draw this line? If you look closely, you’ll see that every time price approaches this line, we get some kind of reaction.
Starting from the left, you can see that once price touches this line, we immediately get a reaction as price makes it’s way down. Eventually, price manages to break past our line before retesting it as support to rally higher. Price comes back down to retest the same structure before rallying higher (third arrow). We could talk about how price reacts to structure every time it gets close, but talking about it doesn’t make you any money, does it? This is where we put faith in structure, and make a trading decision based off of it.
As price approaches it one more time at the last arrow, naturally we would want to be sellers, considering what has happened in the recent past. So we set a sell limit and pray to the gods of structure that it turns out well. For these type of setups, we try to have stops about 20 pips above structure, and targets at the next level of structure. In this case, it was the level of support which price previously bounced off from.
And the result?
A near perfect entry.
The gods of structure must have heard our prayers because price did exactly what it was supposed to. We got a near perfect entry as price casually made its way towards our take profit level. Notice what happens when price hits our target? It immediately retraces and shoots up over 100 pips. A perfect exit to compliment a perfect entry.