We can record a lot of things in a trading journal, and one includes the trading plan. Under the trading plan, there are also plenty of elements. Some of them include the potential trading area and the entry trigger. These factors are essential when we track our progress. They are also helpful to avoid making the same mistakes in the future.
The potential trading area
In every trade, we always consider things like reward and risk ratio. So, we look for potential trading areas that we think will give us a good chance at hefty profits. This is also something that we record in our trading journal. It will provide you with an insight into how or why you made an entry on that trade in the first place. You must have reasons why you thought that that entry is ideal at that moment. We can also call those reasons “logic” or “rationale.” These rationales will tell us a lot about why you are making an entry in that area, and it depends on the trading plan you chose to follow.
For instance, you already have an area that you are eyeing. Always take a screenshot of the chart that shows that area. Keeping screenshots helps you have a visual recall or review of what went down during that moment. It can also help you discern opportunities from traps that can be seen in charts. If the trade gave you profits, it would remind you what good you saw in that area that made you enter the trade. On the other hand, if it gave you losses, you can visualize where you went wrong and have ideas about things you may have overlooked.
Having a potential trading area is one thing and having an entry trigger is another. Entry triggers are also about entering trades. Furthermore, they are a more detailed entry technique. It tells you the exact time you would actually enter a trade once you have already found a potential trade area.
Now that you have an idea where you want to trade and how you want to trade, an excellent entry technique will give you a reassuring confirmation that you will not lose. An entry trigger is what you need to be safe when entering the market. An intelligent trader will never enter blindly. Entering blind is like playing darts where you have a goal, but you put on a blindfold before hitting your stride. Yes, there is a possibility that you may score, but it is improbable. Entry triggers are helpful when you want to avoid the risks of getting into a trade that behaves opposite your favor.
As mentioned earlier, it is essential not to forget to take a screenshot of the chart where your entry trigger is located.
Just friendly reminders
Potential trading areas prevent you from making entries without concrete plans. However, a potential trade area must not come alone. It is supposed to go with an entry trigger. Using one of these alone is not something a smart trader would do.