Quote from Daring:
Please discuss help a newbie out.
I call these two approaches the confirmed entry and the anticipatory entry.
Regarding a confirmed entry: Just because confirmation appears to indicate there is enough buying interest to continue the overall uptrend, it's never guaranteed. So if the logical price at which to place a stop loss is more than I'm willing to pay for the trade, then I have two optional tactics for entry once the confirmation price trades. One of these tactics involves a limit entry and the other involves a stop entry. This is a "second entry" approach. Sometimes the uptrend resumes with such power that there is no second opportunity to get in close to the initial confirmation price trigger.
Regarding an anticipatory entry: In a well defined trend, it's a solid approach. The stop is small, the potential reward is large. I rarely use this approach as first entry though; instead I use a smaller time frame to enter on a 1-2-3 setup* off the key support level (trend line, 20EMA, prev R becomes S, etc).
* 1-2-3 pattern: