As traders we all spend an inordinate amount of time obsessing about our trade entries. We shop brokers to make sure that we get the lowest spread possible. We put on limit orders to assure ourselves of not paying a tenth of a pip more than we intend to. And, we become livid when we top tick or bottom tick an entry watching price move against us the moment we put on a trade.
In the end all this worry is an incredible waste of time and energy.
As anyone who has traded for a while will tell you, success in trading depends far more on exits rather than on entries. Don’t get me wrong, I am in no way proposing that entries should be random. The single most important aspect of any trade is proper selection – which K is reminding me as I write this, is entry in its more primal form.
True that, but what I am talking about has more to do with our endless obsession on the right PRICE rather than the right TRADE. Ultimately it is always much better to be generally right rather than precisely wrong. The EUR/GBP long which we put on a few weeks ago was a perfect example of this dynamic at play. No sooner had I hit the buy button then the pair slipped 10 points against us. However in the grand scheme of things this mistake was minuscule at worst. We went on to bank 75 points of profit and the pair went on for another 300 point run after that.
Clearly getting the trade right, rather than the price right is much more important to our long term success as traders. No matter how much we want to engineer a perfect solution, trading at its core will always be a sloppy, sentiment driven, imprecise enterprise. All we can do is get the probabilities on our side. For more examples of sloppy entries but relatively disciplined exits lets take a look at my daytrading this week.