Fix Your Trade Timing with the
Signal + Trigger Method
Avoid Early Stops and Missed Moves with This Simple Approach
Timing matters…
You can have a great trade idea but too early and you get stopped or pinged on noise before the real move happens.
Too late and the Risk vs Reward (RvR) of the trade just ruins the numbers.
But with a few guidelines, we can fix that…
Too Early or Too Late
We’ve all been there, you see a nice trend, wait for the pullback, buy the pullback… only to find the pullback goes deeper than you thought and you take a stop.
Or, like the chart above, you buy a breakout, only to see price stall out and stagnate before the real momentum kicks in.
The thesis is sound, but the execution kinda sucks.
And it doesn’t matter how good our idea is… if our timing is off, it’s useless.
Of course, the same applies the other way around.
If you pull the trigger too late, there’s often no meat left on the bone, price is half way to its target, your stop is too wide, the whole thing is a mess!
Signal + Trigger = Happy Trader
Here’s an idea to solve the too early vs too late challenge.
Separate your trigger and signal bars.
Huh?
Here’s how your execution method works:
Filter > The context higher timeframe and setup.
Signal > A signal to arm the trade. “Yep, this is ready to go, I just need the final piece.”
Trigger > The final ’yes or no’ to execute the trade.
Eg: Let’s imagine you’re on a 5m trading Gold.
The market’s been rotational with a slight upwards bias and you are looking to get long at the VWAP.
So your signal bar may be:
> I want price to trade under the VWAP.
And your trigger bar may be:
> I want price to close back above VWAP.
You need to see price trade under the VWAP to set the trade up, but it then needs to close back above to activate the trigger.
- If price just cuts through the VWAP like butter you won’t get long (no trigger)
- If price overshoots, you aren’t getting stopped on an early buy
- You now have an obvious place to structure the stop, if the RvR stacks up
Here’s the trade…
Gold
In this trade, instead of just getting long at VWAP: $2,506 and having price move $5 against you.
You wait another 30 minutes, get long on the actual trigger (coincidently at the same price) and you take just $1.5 of heat before price rips off to new highs.
Another example
In this play, the signal fires to the short side, but no trigger. Saving you from a losing trade…
So does this solve all our problems?
C’mon this is not Instagram, you know the answer to that…
But, while it’s not a holy grail, the signal + trigger method is a nice tactic to deploy in the right conditions to improve your entry game.
It might be worth brainstorming how you could deploy it in your own strategy…