Defining entry and exit points

A lot of questions I get from people starting out is how to pinpoint the perfect trade entry (and the perfect trade exit). In my experience, you can’t do that. You can’t time the market because most of the cost you’d incur waiting for the perfect moment would exceed any profit you’d make from the trade.

What you can do, though, is use a few entry and exit techniques as well as a specific mentality that helps prevent loss.

Figure 7.3 – Finding a good trade

Entries

Regarding entries, my rule is that if your entry conditions are triggered, it’s an entry (and the size of the entry is based on your risk management and strategy conditions).

Let’s say that you’ve just arrived in front of the computer and, even though the entry conditions are there, you note that the price already went 10% in your trade direction. Do you still enter? Wait for a pullback before entering...