In my process, a key level does not get me to execute. I consider key areas as nothing more than reference points. I must first see if the market finds it to be a responsive piece of MGI. Just because it’s located on my chart, doesn’t mean the market actually cares about it at all.

Timing

As paradoxical as it may sound, I’m not necessarily looking for the best price to trade. I’m more interested in the move, rather than the price. It’s the difference between being too early and being on time. You wouldn’t want to show up to the party before the host. I would much rather get into the trade when the move actually starts to play out, than try to grab the best price and be stuck sitting in the trade until who knows when. That would be arriving before the host.

This can be the difference between sitting in a trade for 3 hours vs. 5-15 minutes for the exact same trade idea, burning up all of your mental capital while nothing has yet to happen. Calling tops and bottoms are cool for the screenshots, but in practice, it is highly impractical.

Ticket Cost / Risk

Consider your stop loss the same way you would the cost of a ticket. It is the cost to get access to the trade idea and its opportunity — its payout potential. Ask yourself these questions:

• Is this setup really worth taking?

• If so, how much are you willing to risk? How good of an opportunity is it, really?

• How much of a reward is realistically on the table (win probability included)?

• What specific price(s) would offer me a ticket cost that’s worth the opportunity?

Don’t cheat yourself. Understand and accept which price(s) would offer you a ticket cost that actually gives you favorable edge in regard to the trade idea. If you’re chasing a trade or being impatient with your entry, you’re overpaying for the ticket.

By being patient and allowing the market to set up the proper parameters for your entry, risk and potential reward, you’ll find that you can minimize your ticket cost significantly. Trades are simply opportunities — there are decent ones, good ones, great ones, and exceptional ones. As you develop the familiarity with your systems and strategies, your ability to quickly grade them in real time will also evolve. You will then be able to determine what you’re willing to pay as a ticket cost for each setup, and from there, determine which prices with what size allows you to stay within that risk. If the market does not present you that opportunity in a way that gives you considerable edge, simply choose not to overpay. There are, and will always be, better opportunities.

Paying For Information

By not following a proper process and waiting for a sufficient amount of information to present itself, you are paying a premium for the missing information. Be patient — let the market give you enough information to properly frame the setup before jumping into a trade. Don’t fall into the trap of entering trades just because they can work. Every trade can work. Good trades can fail, bad trades can pay — the outcome of the trade doesn’t change whether it was good or bad. Be process focused.

Properly Engaging With The Setup

Trying to call a top or bottom makes it almost impossible to appropriately place the risk. Likely, in that moment, the market has yet to provide any notable location to consider your trade idea invalidated. I am not a fan of putting on risk based off of an arbitrary number of points/ticks.

As price enters your key area, be patient and let things play out. Let the players on both sides make their decisions and gauge the outcome. You don’t want to wedge yourself in the middle of a knife fight — you’re better off just waiting to see who has the upper hand and is likely to be the victor. Here are a few ways to further speculate the outcome:

• [Price action] Price making a higher high (upside continuation).

• [Price action] Price making a lower high (failure to extend upside).

• [Price action] Price making a lower low (downside continuation).

• [Price action] Price making a higher low (failure to extend downside).

• [Orderflow] Buying up top starting to taper, be exhaustive.

• [Orderflow] Selling down low starting to taper, be exhaustive.

• [Orderflow] Buyers aggressively hitting the offer and getting stuck offside (unrewarded).

• [Orderflow] Sellers aggressively hitting the bid and getting stuck offside (unrewarded).

Be patient, be calculated, and most importantly, be deliberate in your approach and execution. Our job is not to engage with every market wiggle. Our job is to engage when it feels like the market has come to us — that we are playing on our own home court, and that the odds are undoubtedly tilted in our favor.