In my previous thread, I said that exits are more important than entries. I would like to rephrase it. The most important thing is structure. To me, it is also the trend (or consolidation). Proper identification often GREATLY increases the probability of your trade working out. By saying the trade "works out", it means that it hits a decent risk reward ratio. Often I can find entries where price will reverse but with shitty risk reward, finding areas where price may reverse is not difficult. The magic happens when you find areas where price may reverse INSIDE a higher time frame or part of a bigger structure that is in confluence with your entry. The combination of an identification of trend, allows 1) Increase of probability 2) Increase of better risk-reward ratio. Entries just help you to optimize and control your risk, allowing you to enter with minimal drawdown. For example shorting a retracement in a downtrend. The structure of the downtrend helps to push price in your favor, and also to better RR. Therefore I said exits are more important, I often looked at where I was going to exit if I took the trade (look at higher time frame structure). "If I was going to enter here, where would I exit and what's the probability of me getting a good trade?" I misled people into thinking literally, exits are more important than entries. However that is not the case. Looking at where to exit before placing the trade is more important because you will look at higher time frame trends. What do you guys think?
I agree. In order to profit price has to go in your overall anticipated direction (trend) for some period of time after entry and prior to exit.
Good entries are way more important than good exits. I can prove that claim easily: a good entry that gets your position to be in the money from the outset allows you to set your stop loss at entry and hence regardless of exit you won't hardly risk aggregate losses across many trades. A good exit is important but by far not as important than a good entry. No matter how good the exit it only functions to limit downside risk. It does not have any implication in and of itself on your overall profitability. A good entry methodology very much does on the contrary.
Most people over think the "exit" when this is the easiest part. I just exit before the close of a higher timeframe candle. Let the market give you the exit.