Entry Tactics for Longer-Term Strategies

Discussion in 'Trading' started by Traden4Alpha, Oct 24, 2002.

  1. How do longer-term (holding time of at least a few days) traders manage their entries? For systems that operate off of daily or weekly bars, the trader must translate an entry signal at the end of the day or week into a specific trading action during the following day. I have yet to find a book that really discusses the pros/cons of different entry tactics within the context of EOD entry signals. I suspect that most backtesting systems (Tradestation, Wealthlab, etc.) presume an enter-at-the-next-open tactic.

    Currently, I use limit orders entered after I get an entry signal and before the following market open. On the one hand, well placed "out-of-the-money" limit orders can be great for profiting from reversion by entering near the intraday extreme (i.e., buying at the day's low or shorting at day's the high). On the other hand, OTM limit orders don't always get executed, so they can miss the move.

    I am also exploring alternate systems that might use a enter-at-open tactic or a stop order. Personally, I'd like to keep the entry logic simple because one of the advantages to longer-term trading is that I am not glued to the markets during the day. This gives me time to further develop my current system, research new trading systems, or annoy all you ETers with these verbose postings. But it does mean that I have to choose a brainless mechanism for entries (I don't want to be a tape reader because its not where my strengths lie).

    In this thread, I'm only wondering about the entries. Exits (which are more important than entries, IMO) are another topic entirely.

    Wishing good entries to all,
  2. I enter near the close of the day of the signal. The signal I use is very common, and there are plenty of times on the folllowing day there is a gap in the direction of the trade. Of course, there are plenty of times that there is some overlap the following day also. The only entry caveat I use is that the price I am entering at must bewithin $1 of my signal price. This is because my signal represents a pivot at which I will reverse the trade. Obviously then, the closer to the signal I can get in the better.

  3. inandlong,

    Nice idea.:cool: Since the prices near the close of the day are a reasonable approximation for the close of the day, I can see how this would work. The key is to be able to get the data, calculate the indicator(s), generate orders, and submit them quickly enough. Ideally, one would want to wait as late as possible to get data as close to the close as possible.

    Now I wish I could edit the poll and add more alternatives like the one you just mentioned.

    Thanx for sharing,