3 Tips to Improve Your TimingTiming is everything in trading. The ability to enter and exit positions at the right moment can significantly impact your profitability.
Here are three simple tips to help you enhance your timing and make better trading decisions:
1. Lower Your Execution Timeframe
Lowering your trading timeframe can provide more precise insights into short-term market dynamics.
Example: Combining Breakouts
Maybe your trading strategy is buying breakouts from flag patterns on the daily candle chart that align with long-term uptrends.
The best breakout trades occur simultaneously across multiple timeframes and achieve high levels of participation. Lowering your execution time frame to the 1hr candle chart can potentially help you to achieve a more precise entry.
Flag Breakout Daily Candle Chart: Amazon (AMZN)
Past performance is not a reliable indicator of future results
Flag Breakout Hourly Candle Chart: Amazon (AMZN)
Past performance is not a reliable indicator of future results
Example: Timing Pullbacks
Maybe your trading strategy is buying pullbacks on the hourly candle chart.
A pullback on a higher timeframe is a downtrend on a lower timeframe. Traders can add precision to timing their pullbacks by looking for trend reversal patterns on lower timeframes that align with the higher timeframe trend.
In the below example, a trader who buys pullbacks to the 20 – 50 period moving averages on the hourly candle chart could use trend reversal patterns on the 5min candle chart to precisely time their entry.
Timing Pullbacks Hourly Candle Chart: GBP/USD
Past performance is not a reliable indicator of future results
5min Candle Chart Adds Precision: GBP/USD
Past performance is not a reliable indicator of future results
2. Use Pre-Alerts
If you’ve been trading for a while, chances are you’re already utilising the valuable tool that is price alerts – ensuring you will be notified when a price hits a certain level.
However, if you’re a momentum trader and setting price alerts at breakout levels, you may want to rethink where you’re placing your price alerts.
The best breakouts are powerful, high-volume events where price is moving quickly. Placing an alert at the breakout level can make trading the breakout rushed and stressful – making for suboptimal timing.
Pre-alerts are price alerts set at levels that prior to the breakout occurring. When used properly they have the potential to bring a number of benefits:
Depth and Detail: Pre-alerts help you observe the breakout in real time. This can provide more detail about the breakouts conviction than if you’re only monitoring the market post breakout.
Reduced Stress: A pre-alert ensures you are prepared and focused on execution prior to the breakout. This will reduce stress levels which should ultimately help you to make better decisions.
Faster Execution: If you’re ready and at your desk prior to the breakout occurring, you stand a better chance of achieving a better entry price.
3. Combine Technical and Fundamental Catalysts
Integrating technical analysis with fundamental catalysts can enhance your timing and decision-making process.
Here are some practical strategies for combining catalysts effectively:
Stay Informed: Stay updated on relevant market news, economic data releases, and corporate earnings announcements that may impact the markets you trade. Utilise financial news websites, economic calendars, and real-time news feeds to stay informed about upcoming events and their potential implications on market dynamics.
Validate Technical Signals: Confirm technical setups with supporting fundamental factors. For example, if you identify a bullish chart pattern, look for positive news or fundamental developments that align with the pattern's bullish bias.
Be Selective: Prioritise quality over quantity when selecting news events to incorporate into your trading analysis. By focusing on impactful catalysts, you can streamline your analysis process and allocate your resources more effectively to capitalise on the most promising trading opportunities.
For more information on the power of combining technical and fundamental catalysts, check out our two-part Trade The News series (link at the bottom of the page).
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
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