Playing devil's advocate for a moment - if a market is going from 300 to 600 then who cares if you buy a short-term high. You are going to make hundreds of points anyway, so it's hardly a big difference. Surely the point is just to get in and ride the move, not to finesse the short-term entry for a few percentage points and thereby risk missing the main move.
I daytraded from 1995-2001 exclusively. Swing trading and intra-day position trading became my primary strategies in 2001. I faced the same problem. I employed the method of scaling (accumulating) into the position. Reducing size on a high risk entry and then increasing the exposure as the price trend continues works well if done with discipline and patience. I documented a scaling swing on QCOM in July in an animated Powerpoint. If you would like to see it, PM me and I'll email the file. Unfortunately, ppts cannot be uploaded to ET. Good luck!
the further away the stop is, the higher the risk. Position sizing is the answer imo. I use an excel spreadsheet with A2 as risk and B2 as shares. B2 formula is = riskmoney/A2 where riskmoney is how much I'm willing to lose per trade. A2 is how many cents/dollars of risk the trade provides. This is useful if you use areas of support/resistance as your stops rather than a pre specified stop.
What if 300 was the high of the year and it goes to 100? Actually, you do have a point. If I thought a move was sufficiently strong, I wouldn't mind trying to jump on. I would pay attention to the daily closes though. If it was up six straight days, I'd be inclined to wait for a pullback.
Seems to me if it is high prob that the trend is up with perhaps some run left, then the long entry should be at a high prob point. Just like any other trade.
if the entry isn't low risk, what you are missing out on by staying flat isn't a chance to make money, it's a chance to lose money. there's always another train.
That is exactly right. I typically will join the bid and place another bid at a lower limit, & then not sweat if my entry is perfect or not. Another favorite is to sell a credit spread. I find with the spread the time value will offset the cost of a sub-optimal entry. Downside to the spread is that gains are limited if the move really extends. You are talking about a conflict in the timeframe orientation - when the medium term points to a 300-600 point advance, a short-term 'good' entry oftentimes never presents itself. Such is the nature of the beast.