Quote from nitro:
It is not a "bias." The question is a quantitative one on the measure of brain energy used, both intellectual and psychological, in order to enter vs exit.
From my own analysis, the entry requires way more brain sugar than anything else.
nitro
I understand from what I read from books like Van Tharp or other system trading books that everyone concentrates on exits. Well, here's the pattern:
1. Entry. The entry is either market driven.
2. Exit. The exit is trade driven.
So I do agree with nitro about entry requiring more brain sugar. But why not use the same amount of brain sugar for the exit??? I guess it's one of the semi-loss trap a system trader has in the intermediate level. They study a lot of stuff and try to put different combinations of entry and exits into a system to create a system without a concept. For example, using a trend-following entry with a short term exits.
Most have about 10-20 Entry signals and Exit Signals and combine them together to find the best outcome and trade it. In a way this is a more of a trial and error... non-conceptual... macrocosm of curve-fitting optimization. I guess this is the problem with beginning system trader going past the 2.25 Profit Factor system development. There is no underlying concept behind the system. So you take a few concept out of the market and put that into the rules as entry and exit. (Well, once in a while you learn things from testing like this but I usually see a new concept of market through this and work the concept. I will never trade a system just from trial and error compatability testing)
I went off-topic with the system but exits generally from publicly available system development routine are easier, because there's not much need to follow the market as much as entry.
For example:
You enter a trade based on a trend following concept. You exit a trade until the trend has changed.
Whether it be profitable or losing trade, that's the underlying concept. Loss would mean the same as an profitable trade because by the time entered a trade the trend wasn't there...
So it's a matter of the relationship between the market and you. "You" meaning, the basis of what you define of the concept.
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Though, I did have a harder time with exits. The reason was simply because of the freedom. For an entry, you have a choice of staying out or not. But for exits, you are obligated to do so.
But if you think of it, you have to take advantage of this when you make a system. Why would you let this become a burden? For example, there's the advantage of "Cut Losses, Ride Profits" Implementing this trend-following concept not only in the exit but also in the entry would help the performance. (That doesn't
generally mean use a trend-following signal like Moving Average or ADX just as it is)
That was one of my first realization becoming a "above average" system developer. Best way to realize things are to trade it. Just going through a tedious back-testing only gives you initial realization. Gaining the wisdom to apply it and molding the initial realization takes experience. And a lot of deep thinking... a lot of thinking...
