One of the most difficult things to determine when trading is when to enter and why to enter. We will show you a very effective method below.

This method is very simple and puts the probability of being right statistically in your favor. First, we look at the Bi-Channel of the trade we are taking. In this first view we see that we have an overall Long Term Channel that is down on the XAUUSD. We want to trade in the direction of the Long Term direction if we want probability on our side. Notice how the upper Yellow line has 3 points where it touches. Although not 100%, this is a good way to locate the trading range. Second, we see that prices have been moving up in that range (Red channel). This is the Intermediate Range or the Short Term Range or channel. Statistically trading in the direction of the Long Term trend has a higher probability of success. But when do we enter within this channel?

As we see below if we look at a close up of this move that is down in the current Short Term channel but in a lower time frame (M5) we see a large number of entry points. Each of these made money. Each of these is a Negative RSI Reversal in the direction of the Long Term trend. The trader starting in the London session could have entered and held or traded numerous times.

To ReCap:

1. Define the Long Term Trend using Channels for a longer time frame.

2. Define the Short Term Trend using Channels on the same time frame.

3. Trade in the direction of the Long Term Channel when price is at the top of the Short Term Trend Channel using signals on the shorter term time frame.

4. For short trades use RSI Negative Reversals; for long trades use RSI Positive Reversals

Reversals are not the same signal as a divergence. Divergences signal that a Reversal is coming. Statistically Reversals are signals that go with the prevailing trend. Reversals typically create better results as they trade with the trend whereas Divergences are typically signaling a retracement of the trend. (For complete understanding of this information read RSI Fundamentals: Beginning to Advanced)

email: paul@youlearnforex.com with questions

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