how important is the entry and how complicated does it need to be?

Originally posted by tntneo
I agree with the posters.
the shorter the time frame the more important the entry price, usually.

I like the question asked by this thread. BUT too often there is not enough emphasis placed on trade direction.

the following is valid for most types of trading, but not all.. anyway.

the entry has 3 parts :
direction, time, price .

the most important is direction.
timing is very important too. there is such a thing as being right on direction and too early (you get big drawdown or loss).
price is the last component imho. even in case of scalping described with IBM, the timing was the issue, not the price.

to properly balance and trigger an entry, you need to evaluate properly these 3 components. that can lead to complicated methods. ...




tntneo
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Excellent points. Another poster also made the point that the time frame you trade determines how important the entry is. Similarly, your stop size is a factor in deciding how important entries are to you.

I have to disagree with the notion that entries are not all that important. Poor entries complicate trade management and lead to the dreaded whipsaw. Poor entries leave you desperately trying to get back to even, rather than managing a profit. Poor entries require larger than optimum stops and expose you to big adverse moves. To say that entries are not important is to say that all price movement is basically random. Otherwise it is self-evident that entries are the crucial factor in a trade. Many believe that prices are random, but I wouldn't expect to find too many of them here.
 
What exactly is a bad entry??? that it goes against you; that you have to eventually sell/cover at or near your stop. There are traders that make a living entering wrong 60% of the time..

I dont consider any of those a bad entry..I just consider them part of the game.

Now looking at the exit is a little different (IMO), and is by far more important than entering.. you cant control the direction of your position once you enter; period ( it either goes ur way or not or stays flat) ...but u definitely have much control on where to exit...it is here where i try to focus on......but your strategy may put a heavy weight on ur entry.
 
Originally posted by ElCubano


scaling into a trade also helps with pricing, but also opens the door to something I think every trader should sway from and that's doublin' down or avg. down...
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scaling in doesn't just mean scaling in while price is moving against you...you can also scale in after the market starts proving you right...
 
I agree 100%...I just think it opens the door for doublin down...people tend to scale in only when the position goes agaisnt them....but i understand what you mean...and I think tntneo meant using scaling to get better pricing....if it is going in your favor, oh well....
 
AAAintheBeltway the entry is important, the question is how important. to me it is not that important as compared to exit.

however, I fully agree with your points. all drawdown related issues basically and risk reward related. these must be carefully calculated in the trading method used.
I only tried to show that entries are overvalued and exits undervalued, while it should be the opposite for most trading styles (there are exceptions) imho.

and yes, I sure think markets are NOT random. funny how most who think it's random, just want to place random bets and not consider this as a serious business.

it's because it's not random that I place direction as top priority parameter in the entry.

tntneo
 
Originally posted by ElCubano
and I think tntneo meant using scaling to get better pricing....if it is going in your favor, oh well....
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there are several ways to look at it.
averaging down is as valid as up. blowing a stop is not. these 2 are usually confused.

I think traders ought to be humble..
focusing on entry is like saying : "I must (and can) select the best entry price and time, in one shot !".
I'd rather admit I can't find the best entry. I want to focus on direction and let the market give me the best price (averaging up or down).
I say it one more time, in case you don't read the thread since the beginning : not all trading styles can live with that !

when you can, it's a good way to pass the difficulties of entries and focus on the real thing : exit.

tntneo
 

scaling into a trade also helps with pricing, but also opens the door to something I think every trader should sway from and that's doublin' down or avg. down...

this is just my opinion/feelings.... [/B][/QUOTE]

 
speaking about entry.......
have question: is it possible to find pair of stocks, where one will react much faster on market moves than other? maybe it possible set up good entry point on lagging stock?
example: you have MA crossover on faster one, but not on lagging one yet. is anyone try to work it this direction?

i just don't want to open new topic for this question, so.....maybe somebody give some answers here))))
Thank you!
 
ElCubano,

How to define a "bad" entry? Depends on what you're trying to do I suppose. Let's say you are intraday stock player, then I'd say always buying after stock had moved up $.50 would probably lead to a lot of bad entries, ie entries where there is a good chance of substantial adverse movement. Those systems with 60% bad entries are trying to catch that small percentage that move big. For them, a bad entry might be waiting too long for the breakout to be confirmed.

My point is that statistically, there tends to be an optimum entry strategy for any trading approach. Deviate from it and you are asking for trouble. If you think entries are not important, then why should exits be important either? I could make exactly the same arguments regarding exits.

ps. I am a big fan of your relative La Gloria Cubana.
 
La Gloria Cubana....they wrap them right down the street from me....let me know if u need some (pm me)

I understand what u are saying..I never said entry wasnt important; I just think its not as important as an exit.....
 
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