Trade Now Or Hold Back?
Timing tips for smarter trading decisions.
Often as traders, we talk about waiting for a level to be tested, or some sort of trigger that increases the probability of a trade working.
But often we don’t talk about the change in RvR we get by simply waiting for the right entry.
A bit of patience can change the structure and dynamic of the whole trade.
Let’s look at an example:
In the first chart, you buy the ignition bar breakout, expecting a move back to VWAP with a stop under the low.
In this chart you decide to wait for a 50% retracement, before going long. Using the same stop and target.
The RvR goes from 1.6:1 to 4:1
A huge jump.
This of course is an example where price did pull back, and it won’t always. But it illustrates the impact that just waiting a bit longer can have.
So what’s the takeaway from this?
Patience…
Just waiting for a few more candles and for price to come to you can be beneficial in more ways than one.
Not only do you get the obvious price improvement, but with a stop and target based on the price action (ie under a key level) it can change the RvR and structure of the trade massively.
The obvious counter to that is “Yeah but price might run on without me”
Fair…
And for some momentum trades like a break of a high tight flag after a drive, this isn’t suitable.
But for many trades where you are trying to catch a rotation or a mean reversion play, this idea of waiting for price to just be a little bit better can be a real boost to your bottom line…
It might be something to ponder.