Entering Trades At The Level vs Price Action

I’m often asked whether I enter trades at the exact level of a zone or wait for price action confirmation. Firstly, lets be clear what this actually means…

A “level entry” is just that… a trade is entered at the exact level of a zone without waiting for price action confirmation. This is achieved with a limit order which is placed at the boundary of the supply or demand zone as shown in the diagram below:

When your limit orders fail to get triggered because price turned 1 tick before your zone, then you know you are picking these zones really well!

With a “price action entry”, we wait for a candle pattern (such as a pinbar or some other signal) to confirm entry at the zone. In this example we would either enter with a market order on a break of the pinbar’s low or have a sell order waiting at that point.

Entering at the level allows you to employ a much smaller stoploss. This in turn improves your potential risk/reward and gets your trade into profit a lot quicker than if you had waited for confirmation.

Have you ever had a trade that’s going your way and decided to set your stoploss to breakeven? Then, no sooner do you do that, and the market comes back to take out your breakeven stop before going in the direction you intended!

Placing your entry (and hence breakeven stoploss) at the level will keep you out of the way of retraces in many cases, and give your trade a better chance of working without leaving risk in the market.

Ok, so how about the other method – entering with Price Action confirmation?

I do use this method too and it’s usually for higher timeframe trades where I have more “wiggle room” for good reward to risk. If there is a large potential profit in the trade, I don’t mind “paying up”, so to speak.

In this diagram, we can compare entering at the level vs entering with P.A. You can see the level entry trader would get to a 1:1 risk/reward (maybe as a first scale) just as the price action trader enters the market.

On the higher timeframe trades (15 min, 1hr, daily) I will sit through retraces, whereas on the lower timeframes (tick, 1 min, 5 min), I want to be out with at least a partial profit before price turns.

Psychologically speaking, entering at the level is a lot more difficult than waiting for confirmation. The market will sometimes plough straight through a supply or demand zone in seconds, without looking back. This leaves a mental scar on the brain, ok, I’m being dramatic! But the next time you come to take a trade, that past experience will be remembered and it will be harder to pull the trigger without waiting.

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