when to enter?

A

ADX_trader

After trading for a few months, I feel one critical element of good trading is the entry. Some people e.g. Alex Elder said in his book that it was safer to enter in short bar than a long bar. But some other people said a long bar was a great opportunity. I still cannot figure out which one is correct. It seems both could be true.

Any suggestion is welcome.
 
Originally posted by ADX_trader
After trading for a few months, I feel one critical element of good trading is the entry. Some people e.g. Alex Elder said in his book that it was safer to enter in short bar than a long bar. But some other people said a long bar was a great opportunity. I still cannot figure out which one is correct. It seems both could be true.

Any suggestion is welcome.
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What is a short/long bar? What time period?

IMO, the entry is mostly irrelevant - it's the exit that is most important. Focus on knowing when to exit and you won't be too worried about entries.
 
when you first start trading, it is common to put too much emphasis on the entry. but then you learn there are other things far more important. the problem is, even after you know this, you still do need some type of entry.
 
I think your parameters are way too vague to hold any meaning. What time frame are we talking here? What type of setup?

You should be taking a much more scientific approach to this. Instead of just following certain entry tips from individuals, take your ideas and backtest them. Spell out your *exact* system (entry, exit, position sizing, risk management) and run it against historical data to see if it can hold its ground. Check out the site welath-lab, and get to know their backtesting facilities very well.

Here you can start to build a system that has some historical evidence as to being profitable in the long run.

Jim - Enhance QuoteTracker
 
For me, each is valid. Many times through a consolidation or base period, before a trigger setup occurs, I'll take the entry in the prevailing intraday trend with a stop at the other side of that base. This trade-off of entering early is that I'm assured my full shares for the position, but the trade is less certain as the trigger for the trend continuation has yet to happen.

On the other side of this is the idea of buying contraction or selling expansion (to steal a few terms from Farley that he described to me years ago). Capitulation is more of a concept trade where entry is quite critical as you won't be able to fill your full lot if you don't have either good execution technique in addition to a "feel" for where the low will be.

Entry is critical because you certainly don't want to be filled at levels where you've taken away too much of the profit potential. Nailing the absolute bottom will be difficult at best in a capitulation type setup as liquidity is mostly thin. So if this stock continues lower after just a brief reversal, your crappy entry can lead to a worse loss if getting out of the stock is difficult due to liquidity concerns. Basically in this scenario, you have mass or majority panic selling creating that contraction bar. This is where contrarion traders look for the quick reversal and "V" kind of recovery. But entering it takes sharp execution technique many times as well as that "feel" for the lows that is voodoo for many and takes many years to attain.

So, which is best? Neither. Learn your tradeoffs. Assured full position with less certainty of trend or make sure you have the trend correctly and then try to gather your full position while fighting everyone else for the available liquidity.

Hope this helps.

Chris
 
yes - the entry is a critical element. a good exit eventually makes the trade a winner or loser - but imho a good trade needs both - good entry and good exit. thinking the entry is rather unimportant might be valid for some single trades - but over the long run this is gamblers attitude (to me it would mean not having a predetermined stop loss).

short bars (range contractions) can be good entry points sometimes.
 
My wife prefers it when I enter with a long bar. I just end up exiting too soon.

Sorry, I'm in one of those Friday afternoon moods.
 
Right, Chris said pretty much what I was thinking. Each has their advantages and disadvantages in each situation. Learn what fits into your trading style / plan.
 
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