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My thoughts follow three asterisks (***) below.
>How much money does one make on an entry to a trade? I would suggest zero.
***How much do you make from trades that you never enter? I'm giving away
all the money that I made from all the trades that I NEVER entered.
>It is not the entry that makes a trader money, it is the exit.
***Exiting with a loss never made me much money.
>The job of the exit one is using is to reduce to a minimum the amount one
will lose on >the trades that will go against him, and allow him the maximum
gain on the >trades that are profitable.
*** The job of the entry is to position yourself for a winning instead of a
losing trade. If all you have are losing trades it doesn't matter how well
you control your losses.
>Without an exit defined, a trader does not >know what the maximum loss will
be per trade, nor does he know the maximum >gain he may possibly achieve per
trade.
***Defining your exit is fine as long as you know what you are doing.
Probably flipping a coin would improve a good many traders exits as well.
One of the reasons many newbie >traders fail is because of the fallacy that
the entry is the most important >part of a trade! Without an exit defined
their capital is soon lost.
***The main reason that novice trades fail is that they don't know what they
are doing and they are often under financed, fear and greed cause them to
make bad decisions.
I >would submit that it is possible, to some degree, by simply having the
exits >defined in a system, that one could make money tossing a coin as the
entry >signal, or, possibly, by listening to the duck
*** I have heard this before but I've never seen anyone put money where
their mouth is. I still say that they are equal in importance.
***One famous and successful trader has said that you should always assume
that any trade that you enter is wrong until it is proven correct. That's
not saying that where you enter is not important because if your entry is
bad you wont have a chance to have the trade proven correct. His advise
about getting out was to be quick about getting out of any trade that is not
proven correct.
***Once proven correct however; he advises that you must press your
advantage by adding to your trade in a prescribed way. He made his money
mainly by sticking with the trend when it was going his way. Determining
trend to the best of your ability is what you do before you enter a trade,
not after.
Brent
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