Wide Entry Zone? Check your Stop loss!

This guide is for: New traders / Limited experience

What this short guide will cover:

  • How to identify wide entry zones

  • Why should you avoid them if you are a new trader

  • How to trade them if you still want to

Losing trades is part of the journey. The best traders in the world lose sometimes but what keeps them going is understanding how to control their losses and picking their battles. Let's take a look at a battle you may want to avoid!

How to identify wide entry zones

Open up any signal and move to the basic trade form. On the right-hand side, you will see the zone % width. Open up the stop loss section to also see your potential % loss based on your current entry price.

What is a wide entry? Typically anything more than 10% could be eyed with caution, 15-20%+ definitely!

Why should you avoid them if you are a new trader

Nobody wants to see a nasty loss of -20% from the middle of the entry zone or even worse if an aggressive entry is taken. New traders are likely to make the mistake of taking a single entry point on the trade and going for a 'set and forget' tactic which will work fine 'most of the time' but when a loss does come...its a huge one:

Wider entry zones or signals that have a large potential stop loss hit need to be approached in a more strategic and technical way.

There are always more signals and opportunities, so if you are in doubt simply stay out! Avoiding losses is much more important than collecting big wins!

How to trade them if you still want to

If you want to go ahead and make a trade on a signal with a wide entry zone we have 2 suggested tactics:

1 - Ladder into the entry zone

Laddering involves taking multiple entries within the entry zone in order to achieve a good 'average price' no matter how deep the price action comes.

You can read more information about that here: https://pro-support.profitfarmers.com/article/92-what-is-laddering-and-how-do-you-ladder-entry-prices

Laddering is not always appropriate as you can still end up taking a hefty loss if you are buying in all the way from the top of the entry.

2 - Adjust the default stop loss and plan to re-enter

This is the most intensive tactic. Analyze the chart and look for the different support levels in the entry zone. Create a plan in your mind of where you will buy at each point and where your stop loss would be.

Go ahead then and make your first aggressive trade but move your stop loss up from the suggested default to match either your chart analysis or your appetite for risk (eg max 5% loss from 1st entry).

If support breaks down and you are stopped out, prepare to enter at the next support level and repeat.

A combination of the 2 tactics above can also work wonders!

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