Knowing when and how to make your entry point is the key to a profitable trade. Many of the losses you suffer as a futures trader will be directly linked to poorly-timed or ill-placed entry points. Choose your entry point unwisely or time your entry poorly and you can turn a sound trade into a loss. Conversely, doubtful trades can come up winners when entry occurs at the proper point and time. The entry is the most critical part of any trade. The trick is in knowing when to strike.
Many traders will tell you that knowing when to sell is the key to successful trading. While the importance of knowing when to sell is not disputed, entering a trade correctly often clarifies the selling point decision. The best trades yield near instant profits. When this happens you know you have entered at the optimum time. There is considerably less pressure about when to sell when you are already winning.
Every sound trading strategy has one entry and two exits. The exit below your entry price is called the initial stop loss. The exit above your entry price is the price objective. The success of a trade depends on your ability to correctly gauge when, where and how to enter. Get your entry wrong and the whole trade goes down the tubes.
There are three basic entry strategies: the key buy, the 30-minute buy and the late-day breakout.
- Key buy. In the key buy, the futures trader enters the market as a buyer just at the point when aggressive buyers start to fear that a rising stock will fall.
- 30-minute buy. By watching for gaps and stalls in the first 30 minutes of trading after the market opens, the futures trader can determine which stocks will truly trend upward.
- Late-day breakout. Futures traders know trading can be maximized late in the day, between
About Bill
