An entry on the right side of the market

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Nordtrader

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I think one of the most frustrating things for new (and not so new traders) is the constant refrain from wiser / more experienced heads that 'exits are more important than entries'. This is no doubt true, and the exit does not necessarily just mean knowing where to take your profit - knowing when to take your losses is (sadly) just as relevant to the 'exit'.

That being said, I often find myself stuck on the entry: as soon as I make a trade the market goes the other way. "Yeah, you and the other 94.9999% of the schmucks out there" I hear you mutter! I've had stretches where my entries have been so consistently bad that I considered hiring myself out as a counter-trend indicator. And yet when I calm down and look at things from first principles, I can convince myself that getting in on the right side of the market shouldn't be so difficult. Surely a cross over MA approach would work well enough e.g. if price crosses above 30SMA on 1 hr timeframe and daily 30SMA is trending up then go long, vice versa for short.

A good entry is also psychologically very beneficial - sure the market may turn around later and then it's about trade management and the exit. However there's nothing so corrosive to a trader's mental balance as repeatedly getting the entry wrong (IMHO). It's true that money management approach and time horizon of your trading style will impact how you view the entry and its immediate aftermath, but I'd still be interested in hearing others' views on this and if they have strategies for low risk entries.

NT
 
I know what you mean. It's taken me ages to figure this out. Decided what works best for me is a moving average crossover.
 
truth is, there's really no guaranteed way of getting your entries right.
So, sorry mate, it boils down to "exits are more important than entries". Not what you wanted to hear I know.
But as long as you are consistent, take every signal that your method (whatever it may be) throws up and maintain your defined money management rules, it should prevent you losing too much money.

Oh, what's that ? You want to make money ???
Well the same principles apply as above regarding exits/MM etc. You just need a method with an "edge", that will produce a higher proportion of winners to losers. Simple really...

If you're a relative newbie, you could do worse than study "the inside bar" method or the 'Synergy" method. You'll find plenty about both on internet. I don't use the former myself but I know it's good; and I have a mate here in Thailand who makes between 30-90 pips every day on Synergy and he's well happy with it.

But there are plenty of other simple systems that work, as long as you follow the method, don't try to "improve" it with this or that filter. And don't skip trades because 'this one doesn't feel right". If your method gives a signal, take it. Try Cornflower 1h system, 3 Ducks etc......
 
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Nordtrader said:
I think one of the most frustrating things for new (and not so new traders) is the constant refrain from wiser / more experienced heads that 'exits are more important than entries'. This is no doubt true, and the exit does not necessarily just mean knowing where to take your profit - knowing when to take your losses is (sadly) just as relevant to the 'exit'.

That being said, I often find myself stuck on the entry: as soon as I make a trade the market goes the other way. "Yeah, you and the other 94.9999% of the schmucks out there" I hear you mutter! I've had stretches where my entries have been so consistently bad that I considered hiring myself out as a counter-trend indicator. And yet when I calm down and look at things from first principles, I can convince myself that getting in on the right side of the market shouldn't be so difficult. Surely a cross over MA approach would work well enough e.g. if price crosses above 30SMA on 1 hr timeframe and daily 30SMA is trending up then go long, vice versa for short.

A good entry is also psychologically very beneficial - sure the market may turn around later and then it's about trade management and the exit. However there's nothing so corrosive to a trader's mental balance as repeatedly getting the entry wrong (IMHO). It's true that money management approach and time horizon of your trading style will impact how you view the entry and its immediate aftermath, but I'd still be interested in hearing others' views on this and if they have strategies for low risk entries.

NT
Click to expand...

I wouldn't say that the refrain is constant. The entry is critical. If you're consistently wrong on entries, it's unlikely that trade/risk management is going to save yuu. More likely, you'll be out of money before you figure out how to make a winning entry.

As to what others do for low-risk entries, that's not likely to do you much good unless you decide to enter exactly the way they do, and that's not likely to do you much good either. What do you trade? What's your timeframe? Do you use charts? What kind? Do you use indicators? Which? How? What are you trying to do? Until you get that mess sorted out, working on finding a "better entry" is probably going to be an ultimately frustrating experience.
 
Thanks for your replies. I trade forex on both the hourly and daily timeframe. When I simply follow an MA cross-over system like the one I described in my original post then more often than not I find myself with an entry on the right side of the market. Thing is that despite this I still find myself trying other strategies based on pin bars / fibs / inside bars / breakouts etc. I think this is because I forget the simple fact that a good entry is half the battle. Of course I'm not saying the other half of the battle (trade mgmt, money mgmt and exit) isn't important, but I think that (for me anyway) emphasis on these makes me overcomplicate the entry in the first place. I just wondered if this rang any bells with anyone else.
Cheers,
NT
 
Do you maintain records of number of winners vs number of losers? Amount of profits vs amount of losses? You may be doing better than you think. If so, and if you can't help trying other strategies, trade them on paper while you're trading as usual. You needn't abandon a winning strategy just for the sake of looking for greener grass.
 
dbphoenix said:
Do you maintain records of number of winners vs number of losers? Amount of profits vs amount of losses? You may be doing better than you think. If so, and if you can't help trying other strategies, trade them on paper while you're trading as usual. You needn't abandon a winning strategy just for the sake of looking for greener grass.
Click to expand...

Indeed, agree with what you say. I do keep records of my live trades. Unfortunately I don't have the programming skills to backtest / forward-test the MA cross over approach I use. My confidence in it is down to some limited manual (pen and paper) backtesting and also its continued performance.

I suppose I posted this thread to try and highlight the importance (in my mind ) of not 'overthinking' the entry in whatever approach / style you trade.
Thanks for your guidance.
NT
 
I currently also have issues with getting in on the right side of the trade.
I will be researching some book titles that would hopefully, help me figure this out.

There is always more to learn I find. :confused:
 
Nordtrader said:
Indeed, agree with what you say. I do keep records of my live trades. Unfortunately I don't have the programming skills to backtest / forward-test the MA cross over approach I use. My confidence in it is down to some limited manual (pen and paper) backtesting and also its continued performance.
Click to expand...

Don't overestimate what computer backtesting can do. I much prefer backtesting manually writing down the orders for entries and exits one bar at a time (whilst trying not to look ahead!). Its the only way to experience some of the phycological pressures you encounter when trading for real (although when the market's open and money is at stake it's a whole different level).

How does your performance compare to the limited backtesting you have carried out to date? ie is the problem in your system or your execution of the system?
 
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Shanghai said:
Don't overestimate what computer backtesting can do. I much prefer backtesting manually writing down the orders for entries and exits one bar at a time (whilst trying not to look ahead!). Its the only way to experience some of the phycological pressures you encounter when trading for real (although when the market's open and money is at stake it's a whole different level).

How does your performance compare to the limited backtesting you have carried out to date? ie is the problem in your system or your execution of the system?
Click to expand...

Hi Shanghai,
Good point about the benefits of manual backtesting - my point is just that it would be nice to have done a statistically rigorous backtest with more data over a longer timeframe. My manual backtesting suggested a win rate of about 60% of my trades with a risk reward ratio of 2:3. Actual live trading has had a win rate of about 55% with a risk to reward ratio of about 1:1. The difference between backtesting and live is mainly down to execution errors on my part that I should be able to iron out with time. In short, the problem with my system is me! (surprise surprise...)
NT
 
With that system you do need to be executing it quite efficiently. With a win ratio of 55% and a risk: reward of 1:1 it doesn't leave much room for a bad trade so your stops and money management need to be good. I'm assuming that your risk includes your trading costs and slipage?
 
Nordtrader said:
Hi Shanghai,
Good point about the benefits of manual backtesting - my point is just that it would be nice to have done a statistically rigorous backtest with more data over a longer timeframe. My manual backtesting suggested a win rate of about 60% of my trades with a risk reward ratio of 2:3. Actual live trading has had a win rate of about 55% with a risk to reward ratio of about 1:1.
Click to expand...

This is the sort of information I was looking for earlier. It seems marginal, at best. However, if you want specific help, you'll need to explain just what it is you use to enter and how you do so. Otherwise, it'll more likely end up being yet another of those hypothetical, philosophical discussions.
 
If you want to enter on the profitable side of the trade more times than not, then read THE BUY ZONE thread in this forum.

It is that simple.
 
TheRumpledOne said:
If you want to enter on the profitable side of the trade more times than not, then read THE BUY ZONE thread in this forum.

It is that simple.
Click to expand...

TRO - thanks for your comments. I've actually been reading through the buy zone thread and it looks very interesting. All the best,
NT
 
I don't get the buy zone. Perhaps I'm losing the ability to communicate in English but it doesn't make sense to me. Am I missing something? Like specific software?
 
TRO posted that he loves relaxing after a winning trade by looking over a moonlit beach (I'm paraphrasing a wee bit but). I asked him how many beaches there are in Arizona but he hasn't replied to me yet
 
rathcoole_exile said:
beaches ? is that the mexican pronunciation to describe those lovely wee lassies ? :cool:
Click to expand...

Now, now.

Actually, that whole area used to be underwater, which is why one can find truckloads of seashells all over the southern portion of the state.
 
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