You may have heard the term “second entry” in trading, but you may not be familiar with its meaning. The term means that you have a second chance to take advantage of a particular trading setup, usually a chart pattern or another form of technical analysis pattern.
An example of a second entry would be if a stock stays in a tight range for a reasonable period of time and moves in the opposite direction from that range. If the fictitious stock “ABCDE” trades between $ 43.25 and $ 45.50 over the past few weeks and then trades at $ 45.60, many day traders and “breakout traders” will start buying the stock. The stock can move up to $ 46.00 or more, but the stock price falls below the previous 45 45.50 after the buying frenzy subsided in this example. Those who bought above 45 45.50 and held the stock are now holding a losing position, so many of their buyers will start selling to reduce the impact of their losses.
However, the stock may re-submit and begin to rise above it. If the stock price falls below the previous high of $ 45.50 only for a short period of time (a few times on a chart, which means a few days on the daily chart or a few minutes on the intraday chart), “second entry” traders buy the stock when the price moves above $ 45.50. The psychology behind this strategy is that short-term buyers and “weak hands” are more likely to be eliminated, so they think “true” breakouts can begin.
Many prone traders limit their business to those who failed the first time but quickly reassured themselves to resume the initial step. As always, check out any technical strategies, apply the right money and risk management methods, and maintain the right trading psychology. Restricting your trades to second entry সুযোগ opportunities only apply to swing traders, long term traders, and day traders.
All standard risk, investment, trading, day trading, and denial of financial services apply in this article.