Exit is more important than entries
- Thread starter metatrader54
- Start date
True man! luck will be in your favor hardly once or twice out of 100 trades
, speaking from personal experience.
Stop complicate things.
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| The further the exit, the more the profit
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------Middle Point
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| The lower the entry, the more the profit
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v
As you can see the entry and exit are equally important because a distance of point/pip of entry and exit away from the middle point carries equal profit/loss.
^
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| The further the exit, the more the profit
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|
------Middle Point
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|
| The lower the entry, the more the profit
|
v
As you can see the entry and exit are equally important because a distance of point/pip of entry and exit away from the middle point carries equal profit/loss.
risk management is very important and it's a bummer to exit a trade when after it continues to go in your favor. I trade with Bookmap trading software so I'm on guard when there is a high level of liquidity coming. In that case I think of exiting the trade or take some profit, depends on other variables also like volume and pivots, but from my experience mostly in a high liquidity level there will be some resistance so to take some profits is securing your money and if the stock keeps going my way I can add.
To think exits involve risk management is a lower level way of thinking.
Entries involve recognizing the start of a trend. Exits involve revognizing the end of a trend.So it is about skill level.If you assign exits as the function of risk management, then you do not reach a level that can recognize the end of a trend.
To most traders,exits require higher skill than entries.
It is not that entries are easier to recognized than exits.Most traders do better entries than exits because they can pick an entry, but they can't pick an exit.I mean if they have 30% probability to pick a better than average entry,they are doing 30% better on entries than exits.
I experienced 3 skill levels:
1. Like most traders, I am not good at entries and exits. And I did not realize whether entries or exits are more important,(in fact, it should be expressed as exits require higher skill than entries.)
2. I have improved to a level that I can recognize where the trend end in most of my trades.So I feel exits are more important than entries.
3.As I improved further to a new higher level, I am much more strict in picking my entries. The probability of my win rate raise to 90%+ because I filter out a lot of trade candidates as I deem them no longer are good enough. And now not only I can have higher win rate, I dare to put higher leverage on my trades,this help me make much more profit than before on each trade, without having higher risk because once things go wrong, I can recognize earlier and can exit fast.So higher win rate+lower risk=higher leverage=higher profit.
At this stage, I feel entries require higher skill than exits.And I feel I am better than before not because I know what to trade,but because I know what not to trade.
Now let's put aside skill level.
Which is more important,entries or exits?
Entries decide whether you can win or lose;exits decide how much you win or lose.
I think the former is more important.
Entries involve recognizing the start of a trend. Exits involve revognizing the end of a trend.So it is about skill level.If you assign exits as the function of risk management, then you do not reach a level that can recognize the end of a trend.
To most traders,exits require higher skill than entries.
It is not that entries are easier to recognized than exits.Most traders do better entries than exits because they can pick an entry, but they can't pick an exit.I mean if they have 30% probability to pick a better than average entry,they are doing 30% better on entries than exits.
I experienced 3 skill levels:
1. Like most traders, I am not good at entries and exits. And I did not realize whether entries or exits are more important,(in fact, it should be expressed as exits require higher skill than entries.)
2. I have improved to a level that I can recognize where the trend end in most of my trades.So I feel exits are more important than entries.
3.As I improved further to a new higher level, I am much more strict in picking my entries. The probability of my win rate raise to 90%+ because I filter out a lot of trade candidates as I deem them no longer are good enough. And now not only I can have higher win rate, I dare to put higher leverage on my trades,this help me make much more profit than before on each trade, without having higher risk because once things go wrong, I can recognize earlier and can exit fast.So higher win rate+lower risk=higher leverage=higher profit.
At this stage, I feel entries require higher skill than exits.And I feel I am better than before not because I know what to trade,but because I know what not to trade.
Now let's put aside skill level.
Which is more important,entries or exits?
Entries decide whether you can win or lose;exits decide how much you win or lose.
I think the former is more important.
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Some traders say its entry, some say its exit, some say its both entry and exit equally.
Well, if you join entry to exit by a line you've got direction, and that's the major factor. People have made good money from bad entries and bad exits but nobody made money being long when prices are falling or short when they're rising. And the longer that direction continues, the more correct it would be to call that a trend and the more money can be made.
Well, if you join entry to exit by a line you've got direction, and that's the major factor. People have made good money from bad entries and bad exits but nobody made money being long when prices are falling or short when they're rising. And the longer that direction continues, the more correct it would be to call that a trend and the more money can be made.
Money management is what really matters. You can lose some trades, but more chances you'll still be profitable in a long-term period.