Once I enter a trade, the 1) stop can be executed by a 5 line C program 2) exit can be executed by a 10 line C program (though that would leave out a potentially lot of VERY profitable trades in many cases) I have no idea how I would program a computer to enter a trade given my style. I agree that the exit and entry are somehow two sides of the same coin, but entering has a greater psychological impact on most traders is my guess (this is highly debatable - some traders hate to lose money. Others hate leaving money on the table more than losing a little. Others think they have not lost until the loss is "realized.") To me, not knowing when to exit either because of a stop (usually requires 30 seconds of explanation) or because of knowing when the market has no longer favors your side (considerably more complex, but still less so than the entry) is elementary. nitro
It's not like which is more important... Both are important... Why would you want to be biased on one side to start off with...???
It is not a "bias." The question is a quantitative one on the measure of brain energy used, both intellectual and psychological, in order to enter vs exit. From my own analysis, the entry requires way more brain sugar than anything else. nitro
Actually, it would be 1 trade, that is the same entry with 3 ES contracts and 3 differents exits at targets of 6, 9, and 20 pts. I do not mean to imply that it is always 20 pts, the last target is either 20 pts or MOC or some trailing stop exit, whichever happens sooner. Yesterday the MOC target would give 21 ES pts, but much more often it is less than 20 pts.
Exactly, especially when it comes to daily highs and lows. It's gotten to the point where I say to myself almost once every day "this trade is taking too long -- it can't be the top/bottom". You never know if a retracement will be quick or prolonged until after the fact, but the idea is to pick your spots and to bail once you realize things aren't snapping back quickly, even if you're still profitible on the trade. Which gets back to nitro's point about the importance of getting a good entry: the best entries shouldn't be easy, the harder the better. So be as selective as possible for intraday trades; if it comes down to whether or not to chase if you're a bit late, it almost always pays to let the trade go and wait for a better opportunity. The idea is that its better to earn 5 quick points with zero drawdown than have to suffer through an open loss to get the eventual 10.
Actually, it would be 1 trade, that is the same entry with 3 ES contracts and 3 differents exits at targets of 6, 9, and 20 pts. I do not mean to imply that it is always 20 pts, the last target is either 20 pts or MOC or some trailing stop exit, whichever happens sooner. Yesterday the MOC target would give 21 ES pts, but much more often it is less than 20 pts.
I understand from what I read from books like Van Tharp or other system trading books that everyone concentrates on exits. Well, here's the pattern: 1. Entry. The entry is either market driven. 2. Exit. The exit is trade driven. So I do agree with nitro about entry requiring more brain sugar. But why not use the same amount of brain sugar for the exit??? I guess it's one of the semi-loss trap a system trader has in the intermediate level. They study a lot of stuff and try to put different combinations of entry and exits into a system to create a system without a concept. For example, using a trend-following entry with a short term exits. Most have about 10-20 Entry signals and Exit Signals and combine them together to find the best outcome and trade it. In a way this is a more of a trial and error... non-conceptual... macrocosm of curve-fitting optimization. I guess this is the problem with beginning system trader going past the 2.25 Profit Factor system development. There is no underlying concept behind the system. So you take a few concept out of the market and put that into the rules as entry and exit. (Well, once in a while you learn things from testing like this but I usually see a new concept of market through this and work the concept. I will never trade a system just from trial and error compatability testing) I went off-topic with the system but exits generally from publicly available system development routine are easier, because there's not much need to follow the market as much as entry. For example: You enter a trade based on a trend following concept. You exit a trade until the trend has changed. Whether it be profitable or losing trade, that's the underlying concept. Loss would mean the same as an profitable trade because by the time entered a trade the trend wasn't there... So it's a matter of the relationship between the market and you. "You" meaning, the basis of what you define of the concept. ============================== Though, I did have a harder time with exits. The reason was simply because of the freedom. For an entry, you have a choice of staying out or not. But for exits, you are obligated to do so. But if you think of it, you have to take advantage of this when you make a system. Why would you let this become a burden? For example, there's the advantage of "Cut Losses, Ride Profits" Implementing this trend-following concept not only in the exit but also in the entry would help the performance. (That doesn't generally mean use a trend-following signal like Moving Average or ADX just as it is) That was one of my first realization becoming a "above average" system developer. Best way to realize things are to trade it. Just going through a tedious back-testing only gives you initial realization. Gaining the wisdom to apply it and molding the initial realization takes experience. And a lot of deep thinking... a lot of thinking...
Also: Eventually, Nitro... I think you are biased with Entry... Van Tharp is biased with Exit... It reminds me of the "Mind Reader" game with the cards... Both are equally important... Or maybe people are Entry-Concepted or Exit-Concepted... Can people be Trade-Concepted? I guess it's the routine of how the person makes a system. They first come up with a signal that looks good. Then works on a exit that makes the most acceptable performance. The separation of the routine like how Van Tharp mentions become scary. But that doesn't mean you are in the market 100% of the time. Stops and Entry/Exits are all equally important. For me it comes all together in one conceptual package. And also, trading is still harder than making a system.
very well said, inandlong. i particullarly like your line concerning oscillation. could you explain what you mean by "putting your chart on close only" thanks ! surfer