Thesis: Swing Traders should not enter with Market Orders

[hyperscalper]

Hi,

I'm going to just make the claim 1) that Swing Traders should not enter with Market Orders, but should use Limit orders instead.

This means that they should use Limit orders away from the market which, if unfilled, expire.

In addition I'm going to advise that 2) at least 2 separate prices be used to complete position entry, that a trader should not go "all in" at a single price.

This can be achieved through 2 or more Limit orders, each at a different price.

The reason for #1 is that the price being offered by the Market is unfavorable for both Buyers and Sellers, so it's important to make the market "come to your price" to get a good entry.

The reason for #2 is that using more than a single "all in" entry gives you a better "cost basis" or a better "average entry price" so, in general, it will tend to be a better entry than just one single price.

I hope this will be the basis for some good discussion.

HyperScalper

 

[ExperiencedJoe]

I know this much: a swing trader should not swing against the trend. No type of order will save him if he does.

Nor should a swing trader scalp for 3 pips.

Lastly a swing trader should not average down and go large when he's losing.

 

[hyperscalper]

I know this much: a swing trader should not swing against the trend. No type of order will save him if he does.

Nor should a swing trader scalp for 3 pips.

Lastly a swing trader should not average down and go large when he's losing.

Yes, I can see what you're saying. Definitely no trader wants to be forever against the trend, since that's suicide. But the Analytics are supposed to tell you what the trend is, or what it will be, once you enter your position.

On the point of Averaging Down, this is a subtle topic. Say I want to go in with a $100k Standard Lot, and I break that up into 4 separate trades, each for $25k. If I'm going Long, then I want to enter each one of them at a Lower Price than the preceding entry, thus "averaging down" to get the best possible entry.

Many people say "Why should I throw good money after bad, and keep adding to a losing position?"

My reply is that you should not, and you are not doing that. You are simply achieving your original intention of entering with $100k and only when you finally have the $100k entered; only then can you say you are "in" the market.

Beyond that, if you decide to put more into the market on price adversity, then that is a different matter. But your original decision, in this example, was to take a $100k Long stake, and you did it by entering 4 $25k entries and each one was at a LOWER price. Once you achieved the $100k, then you can say you have completed the process of Entry, and at a guaranteed BETTER price than if you had done it with a single $100k Buy to enter the Long position.

So I'm saying Entering a market is more of a "process" than a single "event".

HyperScalper