The Right Questions to Ask Before Entering a Trade

Every day, traders—especially beginners—ask the same recurring question:

❓ What do you think Gold will do today? Will it go up or down?

While this seems like a logical question, it’s actually completely wrong and one that no professional trader would ever ask in this way.

Trading is not about predicting the market like a fortune teller. Instead, it's about analyzing price action, managing risk, and executing trades strategically.
So, instead of asking, "Will Gold go up or down?", a professional trader asks three critical questions before taking any trade.

Let's break them down.
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Step 1: Identifying the Right Entry Point

Let’s say you’ve done your analysis, and you believe Gold will drop. That’s great—but that’s just an opinion. What really matters is execution.

🔹 Where do I enter the trade?
Professional traders don’t jump into the market impulsively. They use pending orders instead of market orders to wait for the right price.
If you believe Gold will fall, you shouldn’t just sell at any price. You need to identify a key resistance level where a reversal is likely to happen.

For example:
• If Gold is trading at $2900, and strong resistance is at $2920, a professional trader will set a sell limit order at that resistance level rather than shorting randomly.
This approach ensures that you enter at a strategic point where the probability of success is higher.
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Step 2: Setting the Stop Loss

🔹 Where do I place my stop loss?
A trade without a stop loss is just gambling. Managing risk is far more important than being right about market direction.
The key is to determine:
✅ How much risk am I willing to take?
✅ Where is the invalidation level for my trade idea?
For example:
• If you are shorting Gold at $2920, you might place your stop loss at $2935—above a recent high or key technical level.
• This way, if the price moves against you, you have a predefined maximum loss, avoiding emotional decision-making.
Professional traders never risk more than a small percentage of their account on a single trade. Risk management is everything.
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Step 3: Setting the Take Profit Target

🔹 Where do I set my take profit, and does the trade make sense in terms of risk/reward?
Before taking any trade, you must ensure that your reward outweighs your risk.
For example:
• If you risk $15 per ounce (short at $2920, stop loss at $2935), your take profit should be at least $30 away (for a 1:2 risk/reward).
• A good target in this case could be $2890 or lower.
This means that for every dollar you risk, you aim to make two dollars—ensuring long-term profitability even if only 40-50% of your trades succeed.
If the trade doesn’t offer a good risk/reward, it’s simply not worth taking.
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Conclusion: The “Set and Forget” Mentality

Once you’ve answered these three key questions and placed your trade, the best approach is to let the market do its thing.
✅ Set your entry, stop loss, and take profit.
✅ Follow your trading plan.
✅ Avoid emotional reactions.

Many traders lose money because they constantly interfere with their trades—moving stop losses, closing positions too early, or hesitating to take profits.
Instead, adopt a professional approach: set your trade and let it run.

📌 Final Thought:
The next time you find yourself asking, “Will Gold go up or down today?”, stop and ask yourself:
📊 Where is my entry?
📉 Where is my stop loss?
💰 Where is my take profit, and does the risk/reward make sense?

This is how professional traders think, plan, and execute—and it’s what separates them from amateurs.

👉 What’s your biggest struggle when it comes to executing trades? Let’s discuss in the comments! 🚀

Disclosure: I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analyses and educational articles.