Four Key Criteria to Consider Before Taking Any Trade
Trading is not unlike other activities that require pinpoint accuracy, critical planning, and adherence to tight rules. Trading on its own is gambling. I know most people won`t agree to this, but the sweetest part is that, anyone taking this seriously can become a rich person in a short time. Trading can still make beginners poor and broke. Only people who have been in this situation will relate. I can remember when i lost my hard-earned money in trading, it was so painful, but i did not give up though. Let’s delve to the matter.
Note that, no self-respecting trader really gets into the markets without a well-written plan; going in for anything less is, in effect, inviting defeat, which might have disastrous consequences. Today, we will deliberate on these four crucial critical that should be given a careful check before considering any trade—i see them as a factor which raises your success rate in this particular endeavor.
4 Must Know criteria before taking any trade
1. Make Sure There Is an Order Block
An order block in a beginners understanding is an area or a zone, that is the part in chart where institutional orders (big players) have been placed, this often leads to either a strong area of resistance or support. The institutional orders are trades taken by big organization or bodies like: Banks, Hedge funds, or Government entities, that often make big moves in the forex markets. This institutional traders, trades in large volumes, their actions can cause an influence in the price of stocks, currencies, or other assets.
For instance, people that buy or sell in large volumes in the financial market are the institutional trading, which in turn opposes the individual or retail traders. Their strategies often shape market trends because they move such large amounts of money.
Be well assure that if you fail to spot or detect the right order block can lead to entering trades with little market backing, which can likely increase the chance of losing the trade.
2. There Must Be a Fair Value Gap (FVG)
Never enter a trade where the FVG doesn’t align with the market’s direction, as this can lead to price manipulation. Fair value gap (FVG) always happens when there’s a well detected imbalance between sellers and the buyers or the opposite, this often leaves a gap in the market price or at the middle candlestick between buying and selling. This gap between the buyers and the sellers can signal inefficiencies in the market. This price gap can be filled by the price returning to the levels and reclaim everything before going back.
By understanding where the fair value lies, you can anticipate price retracement, providing an opportunity to place high-probability trades.
3. Order Block Must Lead to a Break of Structure (BOS)
Confirmation should have been a BOS setup after defining an order block. The BOS would imply that the former trend had stopped and that a new trend was just about to get rolling. It had been a break of structure giving an indication of momentum in a new direction, confirming that the setup to trade was with the market trend.
Lets have a table that explain what each criteria does
| Order Block | Fair Value Gap (FVG) | Break of Structure (BOS) |
| Major resistance/support zones | Price imbalance | Trend reversal confirmation |
4. There Must Be an Impulsive Move
For the final criteria, the market should display an impulsive move, a strong price movement that follows the BOS, showing a clear direction before you execute your trade. Impulsive moves will very often signal that the trend is in process and hence bring more confidence in executing the trade. Always wait for an impulsive move before entering a trade to avoid whipsaws and false signals.
You will be able to refine your trading edge and make informed decisions to eliminate risks by checking all four items before entering the trade, whether it is an Order Block, FVG, BOS, and Impulsive Move.
