Urban Myth: Entries Aren’t that Important
Yes, they are. If you have been involved in the markets long enough, you may have come across a belief that says entries aren’t that important; exits are. Proponents will point to a chart where a market has enjoyed a strong trend, saying the entry on such a large move is irrelevant. It’s the exit that is important to ensure the trader captures most of the trend. And yes, in hindsight you can understand the observation. After a huge move, the exit will be very important, and relatively more important then the entry, to ensure the trader can bank as much of the profit as possible. No one enjoys giving back profit. But that is with hindsight. The proponents are talking with the benefit of showing you a picture-perfect chart, which has already enjoyed a strong trend. When you enter a position, you have no idea whether the trade will enjoy a strong trend. So I totally disagree with their position, and when I read or hear it I automatically become suspicious about the person’s trading credentials. Entries are terribly, terribly important. They directly define your stop placement, initial risk, and potential loss. The size of your losses, compared to your wins, directly affects your expectancy! And remember, you trade for the opportunity to earn expectancy. When you enter a trade, you have no idea whether the trade will enjoy a strong trend. When you enter a trade, you have no foresight. You have no crystal ball. You do not have the luxury of hindsight. You only have the now. And the now is all about controlling risk and trading for the opportunity to earn expectancy. In addition, since entries define your initial risk, they also directly affect your money management strategy for position sizing. The smaller the initial stop, thelargeraposition sizeyoucanputon.Remember,moneymanagement is the secret to survival and big profits. Consequently, this makes your entries extremely important regardless of your time frame. And it’s particularly important for long-term traders who have very low accuracy rates, meaning thatonce theyfinally snagawinning trade theyneed tohave thelargestposition size on that they can afford to make up for the 67 percent of losing trades! So in my mind I’m alwayssuspicious of peoplewho suggest entries are not that important, and are less important than exits. In my mind, they’re all terribly important! They directly affect your initial risk, which in turn directly affects your money management’s position size, which directly affects your survival and potential to earn big profits. Entries are terribly important.
Yes, they are. If you have been involved in the markets long enough, you may have come across a belief that says entries aren’t that important; exits are. Proponents will point to a chart where a market has enjoyed a strong trend, saying the entry on such a large move is irrelevant. It’s the exit that is important to ensure the trader captures most of the trend. And yes, in hindsight you can understand the observation. After a huge move, the exit will be very important, and relatively more important then the entry, to ensure the trader can bank as much of the profit as possible. No one enjoys giving back profit. But that is with hindsight. The proponents are talking with the benefit of showing you a picture-perfect chart, which has already enjoyed a strong trend. When you enter a position, you have no idea whether the trade will enjoy a strong trend. So I totally disagree with their position, and when I read or hear it I automatically become suspicious about the person’s trading credentials. Entries are terribly, terribly important. They directly define your stop placement, initial risk, and potential loss. The size of your losses, compared to your wins, directly affects your expectancy! And remember, you trade for the opportunity to earn expectancy. When you enter a trade, you have no idea whether the trade will enjoy a strong trend. When you enter a trade, you have no foresight. You have no crystal ball. You do not have the luxury of hindsight. You only have the now. And the now is all about controlling risk and trading for the opportunity to earn expectancy. In addition, since entries define your initial risk, they also directly affect your money management strategy for position sizing. The smaller the initial stop, thelargeraposition sizeyoucanputon.Remember,moneymanagement is the secret to survival and big profits. Consequently, this makes your entries extremely important regardless of your time frame. And it’s particularly important for long-term traders who have very low accuracy rates, meaning thatonce theyfinally snagawinning trade theyneed tohave thelargestposition size on that they can afford to make up for the 67 percent of losing trades! So in my mind I’m alwayssuspicious of peoplewho suggest entries are not that important, and are less important than exits. In my mind, they’re all terribly important! They directly affect your initial risk, which in turn directly affects your money management’s position size, which directly affects your survival and potential to earn big profits. Entries are terribly important.
MA provides the market's current direction and strength.
