Waiting for “Confirmation” Before Entering a Trade

A question we get asked frequently is whether we wait for “confirmation” before entering a trade, or if we just enter right at our Support or Resistance Zone without waiting for any confirmation. The short answer is: We do not wait for confirmation. Watch the video to learn why it’s a bad idea to wait for “confirmation” and how entering right at a Support/Resistance Zone can not only improve your bottom-line, but give you a psychological edge as well.

  • Adrian

    Nice video btw, but surely if you were entering without confirmation you would have an order to enter at 1493 before price touched so you would have been in just after 10:15 or at least the red bar at 10:30 which was earlier than you put the entry marker?
    To me it looks like you did wait for confirmation as your entry was after price had put in a minor low.

    • http://blog.opentrader.com/ Awais

      Hi Adrian,

      That 1st test of 1493 would be valid as well but considering the quick rejection there, it’s very unlikely that you would have been filled. That’s the only reason I didn’t place the marker there (only 273 contracts executed at 1493 on 1st test).

      -Awais

    • http://twitter.com/nojgic Petr Neugebauer

      I started entering trades without confirmation a month ago and I can confirm Awais’ words. It has many advantages.
      However, in this instance my entry was on that strong bearish bar with limit on 1492.75. So a little bit earlier than Awais shows in this video.

  • Dave

    Great video (as always). But it be interesting to know how you work the exit as well. Are you just bailing on the whole position at the first touch of the 47 target or are you just using that as a spot to take some profits and then watching price action from there? I find playing the exits correctly to be even harder than playing the entries.

    • http://blog.opentrader.com/ Awais

      Hi Dave,

      Getting the exits right is even more important. That’s why our training program has over 5 sessions dedicated to exits and exit techniques (see: http://tour.opentrader.com/category/setups-execution/ ).

      To quickly answer your question here, it depends on the trade idea and how much time is left in the day for that idea to play out. For example, on the end of day Long off 1493.25, I wasn’t looking for more than 1496.25 because we were heading into the Close and it made sense to exit the entire position there.

      -Awais

  • J

    Thank you for the video. But in your example, you also waited for confirmation, because you did not buy 93 blindly on the way down; you bought only after 92 traded. So, you also waited for confirmation too. Also, it seems you are combining two things together which do not necessarily need to be. You seem to imply that waiting for confirmation implies a subpar entry location, but quite often (though not always) the market gives an opportunity to enter at a good or better price than if you had entered blind. Even if you waited until 95 had traded, you could still do as I did in this very case yesterday–buy 93 (or 93.50 as I did). Sometimes you will not get in, but in most cases you will. So, just because I wait for 95 to trade, that does not mean I have to take a newbie-ish entry and buy 94.50 (“jumping in” as you said), I will usually wait for a discount and do a limit buy where I originally wanted to.

    Also, you said in the video that “if you had simply taken the trade at the right trade location …” While we have areas of interest that over time have shown that they are likely to get a reaction from the market, just because I have a trade location possibility does not mean that that it will get a reaction from the market this time. In other words, there is such thing as “right” trade location, because my analysis may be to buy 1500, but yours to buy 1498… who’s right? Well, we don’t know until the market shows which one is more important. But the bottom line, I think, is that you actually do wait for some confirmation, else you would have bought 93 earlier than you did. I think that most traders have a problem of jumping in too early, and most would benefit much more for waiting for the market to show what it actually wants to do, rather than assuming their trade location is so accurate that they can enter blind.

    As always, thanks for the video! :)

    • http://blog.opentrader.com/ Awais

      “just because I have a trade location possibility does not mean that that it will get a reaction from the market this time.”

      That’s true regardless of method or how good you are at identifying good trade location. Even areas with a lot of confluence will fail sometimes. That’s the nature of the market. But with experience, one can identify very high probability key areas. The idea is to not hesitate and execute at that area if the reward to risk and context supports the trade idea.

      I think you’re focusing too much on this specific example. To give you another example, I went Long at 1493.25 near the end of day (targeting 1496-1497); the swing low was 1493. Waiting for confirmation and getting worse trade location would invalidate that setup for me.

      Again, it’s not about these specific trades or examples; it’s the bigger idea to not wait for confirmation when price gets to an area where you expect a reaction. That’s the key takeaway from this short video. We’re planning a Webinar where we’ll dive into more specifics :)

      -Awais

      • J

        Thanks Awais, and I look forward to the webinar! :)

  • http://blog.opentrader.com/ Awais

    I think you guys are focusing more on the example than on the principle. This is just one example. We had a Support Zone at 1490.75-1492.75 so executing withing that Zone on the push below 1493 was a valid Long setup for us. I didn’t include that in the video in order to keep things simple and keep the focus on the principle.

  • 2latino

    Well done, perfect.and if you secure your trade on the first 3 to 4 ticks your winn loss ratio will be amazing.thanks

    • http://blog.opentrader.com/ Awais

      Thanks!

  • Ralph

    I have to agree with you are saying in the video. In was looking for conformation on 5 min chart and totally missed the trade today :(

  • http://blog.opentrader.com/ Awais

    Another nice example is from Friday, 2/1/2013. After the 9 AM (CT) econ reports, ES set new highs and then pulled back to 1503. We had Support at 1503.25 and entered Long there (with no confirmation). Later, the 5-minute bullish engulfing candle at 10 am (ct) provided confirmation. Anyone who waited for that type of confirmation before entering got an entry 2.50-3.50 points higher than if they had simply entered at Support.

  • Pete

    I sort of agree, although it depends on what it is you use for confirmation.

  • agnnis

    very useful article especially for a newbie. thanks for informing now I’l keep this in mind when trade in fx-insight.com

  • Real fx trader

    Lol this is ridiculous,just wasted a couple hours on his terrible webinar,keep your money folks don’t waste on this guy, its rip off

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