A game-changer—increase in entry size based on the grade of set-up.

I introduced nine markets to my trading watch list this week and saw a profound favourable difference. Why?

Recently I’d traded only one and then two currency pairings. That had the advantage of knowing my market and, by association, controlling risk. But it introduced unwanted aspects to my trading too.

Patience is my Achilles heel. With only a single pairing, it might not be in play for some time, and, through impatience, I’d take a less than perfect setup trade entry. The in-play is an expression often used by SMB Capital and also identified by Lance Breitstein. They refer to stocks, but as the definition is technical, the principle applies to currencies too.

Observing so many more pairings, I’m more conscious of ‘always in’ and structure, which often results in an improved setup selection. For example, if I rate my setups from a ‘C’ to an ‘A’, I find that with multiple charts, I’m only taking what I might class as ‘B’ and ‘A’ trades and passing on the ‘C’ opportunities. Previously, with one or two pairings to view, I had a plethora of ‘C’ trade setups to my name.

Another advantage of waiting for the higher grade entries is that I can build my trade size and, conversely, my risk more confidently. This selective size and bet process, championed by Breitstein, is a game-changer. Yes, let’s not put the cart before the horse here. Reading probable direction (or always in), market structure—and recognising in good time a favourable setup—has to be proven before we up our stake.

After months of charts and hundreds of setups (a relatively limited view, thousands would be better), I found that the 500 tick chart provided three times more (precise) entry setups than the 5-minute chart. However, the 5-minute chart offers a better price over time visual structural assessment. So I have gone with both.

The left shows a 500 tick chart set at a ten pip scale (the market is closed hence the wide bid/ask lines), and the right shows a five-minute graph with an automatic scale.

Every chart can change our perspective about price over time and volume capitulation depending on its median and how we set the axis. I can identify the market structure more quickly from the layout of the right-hand chart. However, the one on the left is for trade entry. The advantages here are consistent risk assessment, thereby reducing errors, and often a sharper (and for me, it is subjectively less emotional in its appearance) presentation of a setup.

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