The key aspect here is that a trader must be able to predict market directionality across a given time horizon after an entry happens. The quality of an entry can be measured by the maximum favorable excursion (MFE) and maximum adverse excursion (MAE) values at different time horizons. Having a very bad entry means that MAE will be bigger than MFE on average, across all time horizons. Meaning that the expectation to lose is on average bigger than the expectation to profit. If the entry has a favorable average MFE/MAE then it means that the entry is suboptimal, since you need to stay on average a long time on the market before the market evolves in your favor. Being on the market is a dangerous thing as it creates risk exposure and having better entries ensures that you can be inside the market the least possible amount of time for the money you want to make. Maximizing the average MFE/MAE ensures that you will be trading in a much better manner, where your exits have better alignment with your entries.
One of the trading techniques I use involves the use of machine learning to obtain a prediction of MAE and MFE for every potential entry across several time horizons. This allows me to see how good an entry might be and only take it if I can exit a trade within a small time horizon for the money I want to make. There is no reason to hold onto a trade for 8 days to follow a trend with a sub-optimal entry if I can just pin point the place where 80% of the movement within those days will happen with a good accuracy. Of course, the above is much more complicated than I make it seem but the general point is that you should try to increase average MFE/MAE at small time horizons which will increase your overall trading system quality.
A good entry means less risk exposure, less time inside the market.
One of the trading techniques I use involves the use of machine learning to obtain a prediction of MAE and MFE for every potential entry across several time horizons. This allows me to see how good an entry might be and only take it if I can exit a trade within a small time horizon for the money I want to make. There is no reason to hold onto a trade for 8 days to follow a trend with a sub-optimal entry if I can just pin point the place where 80% of the movement within those days will happen with a good accuracy. Of course, the above is much more complicated than I make it seem but the general point is that you should try to increase average MFE/MAE at small time horizons which will increase your overall trading system quality.
A good entry means less risk exposure, less time inside the market.