Trading the right way is not about guessing—it’s about **structure, discipline, and understanding price behavior**. This guide shows you the exact **9 steps** professional traders follow, focusing on analysis, precise execution, and robust risk management.
1. Understand the Market Structure
The foundation of proper trading is defining the primary market structure to ensure you trade with the trend (Higher Timeframe):
- **Uptrend:** Consistently forming Higher Highs (HH) and Higher Lows (HL). (Buy only)
- **Downtrend:** Consistently forming Lower Highs (LH) and Lower Lows (LL). (Sell only)
- **Sideways/Range:** Price moves horizontally between S/R. Avoid trading directional setups here.
Visualizing Price Interaction with Structure
2. Mark Critical Support & Resistance (S/R)
These levels represent the most important zones for potential entry and exit. They are where past major buy/sell orders were executed.
Support
A price level where buyers push the market upward, typically a **Previous Low**.
Resistance
A price level where sellers reject upward movement, typically a **Previous High**.
For efficient S/R mapping, utilize tools like Gold Support & Resistance or automatic Forex Pivot Points.
3. Wait for Clear Entry Confirmation
Never chase the price. Professional traders wait for the market to confirm their analysis at a critical S/R zone:
- **Breakout + Retest:** Price breaks S/R and successfully retests it as the new S/R.
- **Candlestick Rejection:** A strong signal like a Pin Bar, Doji, or Engulfing pattern at the S/R level.
Candlestick Rejection Confirmation (Pin Bar)
4. Follow the Correct Entry Setup
Buy Setup
- Uptrend confirmed across H4/H1.
- Price pulls back to a major Support or **Higher Low**.
- **Enter** after a bullish confirmation candle appears at Support.
Sell Setup
- Downtrend confirmed across H4/H1.
- Price pulls back to a major Resistance or **Lower High**.
- **Enter** after a bearish confirmation candle appears at Resistance.
5. Define Risk and Lot Size
This is non-negotiable. Limit your risk to **1% to 2%** of your total capital per trade.
Lot Size Calculation
Your lot size is determined by your fixed risk percentage and the distance of your Stop-Loss (in pips). Ensure you calculate your exact lot size using a Lot Size Calculator before placing the trade.
6. Place the Stop-Loss (SL) Properly
The SL protects your capital. Place the SL logically—behind the protective market structure:
- **For Buys:** Place SL clearly *below* the confirmed Support or *Higher Low*.
- **For Sells:** Place SL clearly *above* the confirmed Resistance or *Lower High*.
7. Set Realistic Take-Profit (TP) Using RR Ratio
Define your Take-Profit using the **Risk-to-Reward (RR) Ratio** to ensure your wins are statistically larger than your losses:
- **RR 1:2:** You risk 1 unit to gain 2 units (Safe and consistent).
- **RR 1:3+:** Ideal for strong, trending markets.
Use the Risk & Reward Calculator to accurately project your TP level based on your SL distance.
8. Avoid Trading During High-Impact News
High-impact economic news releases create erratic volatility that can instantly hit your Stop Loss before moving in the intended direction. Most beginner accounts are lost during these spikes.
- NFP, CPI, FOMC, and interest rate decisions are the most dangerous.
Stay updated on major global events by checking our Realtime Market Dashboard before the trading session starts.
9. Review Your Trades Daily (Journaling)
Journaling is the fastest path to self-correction and improvement. Your journal should contain:
- Chart screenshot with S/R, Entry, SL, and TP.
- Reason for entry (e.g., *Pin Bar at H1 Support*).
- Your emotional state at entry (e.g., *Excited, Calm, Anxious*).
- Final RR ratio and key takeaway for the next trade.
Common Mistakes to Avoid
- No stop-loss (Ignoring risk management entirely).
- Overtrading or taking revenge trades after a loss.
- Chasing the market, leading to late entries.
- Using excessively large lots after a winning trade (overconfidence).
Risk Warning
Trading Forex, Gold, and Crypto involves significant financial risk. Always ensure you are following your risk management plan. This article is for educational purposes only and not financial advice.
