| How Important is Your Trade Entry? |
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| Written by Reece Mathews |
| Wednesday, 07 April 2010 17:38 |
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A trade entry can be reasonably viewed as a crucial element of every single trade. Most traders feel this way because it is after all, the first major decision that can either lead to profits or losses. What some don't realize though is that it may not always be prudent to spend too much time pondering over perfect entries.
A trade entry can be reasonably viewed as a crucial element of every single trade. Most traders feel this way because it is after all, the first major decision that can either lead to profits or losses. What some don't realize though is that it may not always be prudent to spend too much time pondering over perfect entries. Defining the policies that will tell you which trades to enter is vital because this is how you will determine which securities are best for you. You can appreciate the true value of entry rules when you consider that there is a virtual universe of securities. It would be impossible to manually sift over every single security which is why some folks just make guesses. Rules can help save you time or can save you from the possibility of making bad guesses. The problem with some trade systems is the tendency to complicate entries. A lot of traders look into reports, expert tips, rumors and news just to get a whiff of that one perfect spot that they are looking for. The truth though is that the real best way to find when to get in is to follow a simple and direct path. This seems opposed to what research oriented investors are used to. You will realize though that this is the technique that many hugely successful traders use. In short, this is what can help you make profits. So where can you pick up a simple trade entry rule? You only have two options. If you have time in your hands, you can make your own rules. You can also just copy what successful traders use. It makes better sense to make use of what already works for other folks. Before you take this piece of advice though, you should maintain a cautious stance. Your entrance point should really be part of a greater system. This takes into consideration other relevant factors such as exits and money management rules. When taken as a whole, your comprehensive system is what can really lead you to steady profits. In general it is often best to create your own trading plan from scratch rather than completely copy off from successful investors. This is because a custom blueprint takes into consideration your unique and personal risk level tolerance. If having a custom scheme is crucial, is copying entrance policies against this idea? It may seem so at first. You should however learn to differentiate between copying outright and borrowing. There is nothing wrong with choosing to pick the best parts of various methods and stitching them together to form your own unique set of rules. Before you start hunting for a rule that will work for you, bear in mind that there is no perfect indicator. There is no way on earth that you will be able to pick an absolutely flawless trade entry. Don't worry about this too much though. Although your entrance seems all important, it is all really just ten percent of your overall system. What you should be paying more attention to are the aspects that you retain greater control over such as your trading psychology and your risk management policies. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Get Yourself A Trading Plan. Find Out How At http://www.freetradingsystems.org. |