Entering Without A Setup ...

[Redneck]

Quote from LeeD:

So, is having a rationale behind every trade redundant?

LD,

Very interesting question


I used to think it was not….


Now – knowing without a doubt that anything can happen in the market at anytime – and I may never come to know the real reason it happened… and even if I did it would not matter one bit – imo yes it is


To me it’s more important to anticipate (which is not the same as predict) and know/ trust how I will react


RN

 

[The Big D]

Quote from TrueProp:

The concept of a setup is mostly absurd is an absurd statement.

You can create linguistic circles until you're blue in the face, but this thread has amply demonstrated that no one can agree on what a setup even is.

It's a word that gets used without any meaning - sort of like the 'fancy' in fancy ketchup.

 

[LeeD]

Quote from Redneck trader:
LD,
Very interesting question

Thanks!

Quote from Redneck trader:
knowing without a doubt that anything can happen in the market at anytime

You sound like you read to much (or just enough?) Mark Douglas.

Quote from Redneck trader:
To me it’s more important to anticipate (which is not the same as predict) and know/ trust how I will react

That's a very deep idea. I need to contemplate... To think about this, maybe some of my most disappointing trades are a result of me not planning suffuciently far ahead....

 

[Redneck]

Quote from LeeD:

Thanks!

You sound like you read to much (or just enough?) Mark Douglas.

That's a very deep idea. I need to contemplate... To think about this, maybe some of my most disappointing trades are a result of me not planning suffuciently far ahead....

Yes Sir I read Trading in the Zone… (4 times - slow learner)

More importantly – I’ve assimilated parts of it into my way of being


More importantly still – I lived through some wild flippin market moves – the latest being last week

fwiw – As your thinking about planning ahead – just don’t get too far ahead – else the market will turn and leave you behind


RN

 

[TrueProp]

Quote from The Big D:

You can create linguistic circles until you're blue in the face, but this thread has amply demonstrated that no one can agree on what a setup even is.

It's a word that gets used without any meaning - sort of like the 'fancy' in fancy ketchup.

People may not agree on how much credence to give to a particular setup, but the fact that setups or proxies to initiate a trade that consistently repeat over time is indisputable. You can talk semantics all day my friend, but if you're not looking for specific types of situations consistently as a trader, whether they be fundamentals, valuations, S/R, level I/II data, OB data, planetary alignments, or whatever, you're probably not making any money. Seat-of-the-pants trading is quick way to end up on the seat of your pants.

 

[Ghost of Cutten]

You don't make money on entry or exit, you make money during your holding period (if the market goes your way). Also, even the perfect entry with amazing risk/reward, fairly soon becomes mediocre risk/reward once the early "easy" profit has been made.

Consider a market move from 100 to 150. Entering at 101 is great, but does not by itself give you a great profit. It is better to enter at 110 with poor entry skills, and have good holding on ability, so you sell at 140; rather than to enter near-perfectly at 101, but not know where the market is going by 105, so you sell prematurely.

The ideal entry here with mediocre holding ability gets you about 4 points. A poor entry with good holding ability gets you 30 points. The great trade entry guy makes 4 points with about 2-4 points risk. The great hold guy makes 30 points with about 12 points of risk. The guy with good holding ability makes 8 times as much per trade for only 4 times as much risk, a superior profit profile and superior risk/reward profile too.

 

[Swan Noir]

I will be more specific tomorrow when I am more awake but I am very pleased with many of the comments in this thread. There are things said here that I have never before considered.

Manana

 

[jsmooth]

Quote from Ghost of Cutten:

You don't make money on entry or exit, you make money during your holding period (if the market goes your way).

this is exactly right....The only thing you really NEED to know when putting on ANY trade (regardless of the setup) is where will I get out if I'm wrong....And if you have the mental disicpline to actually get out you could really flip a coin and just put on the trade. As long as you know where you're get stopped out, and you know how to hold winners and add to them you'll eventually find success. This is pretty much how to get into a market that is already trending....Get it, with the direction of the trend, have a stop loss in place, and if your right and the market keeps trending your way, you need to know how to add to that position and move your stop loss & profit target up/down according what the market is telling you...this is easier said than done obviously...

 

[bigarrow]

Quote from Ghost of Cutten:

You don't make money on entry or exit, you make money during your holding period (if the market goes your way). Also, even the perfect entry with amazing risk/reward, fairly soon becomes mediocre risk/reward once the early "easy" profit has been made.

That has been my problem, I get in on excellent entries and get out way too early. Trading on a longer term time frame has helped me some, not enough but some. Part of the problem for me anyway is entries and exits are two different thought processes. I have the entry process down but not the exit process. You've got me thinking now Ghost.

 

[LeeD]

Quote from Ghost of Cutten:

You don't make money on entry or exit, you make money during your holding period (if the market goes your way). Also, even the perfect entry with amazing risk/reward, fairly soon becomes mediocre risk/reward once the early "easy" profit has been made.

I find it the toughest to take profit early