Which is The Most Important Enter or Exit Point?

[thetrad3r]

Dear Friends,

Some traders say exit point is more important than enter point. You can still wrong at your enter point but manage to get profits providing your exit point is right.

Some traders say enter point is more important than exit point. Providing your enter point is right you can maximize your profits.

There are a lot of great people here, I wonder which premise you choose and base on what reason?

Also can you provide the example of your enter or exit point?

Have you test the data? and what's the result? how much the return, and drawdown?

[WallStreet-Parano]

Both entry and exit points are twins.

Let's take a look at this chart:
http://www.mediafire.com/imgbnc.php/a9acb9124cb25e0cee295c1a04ab83814g.jpg

A good entry point helps you to stay in the trade and make your trade more profitable.

A wrong entry point or premature entry will make you lose money even if you trade on the right direction. Why? Because the market kicked you away (triggered your stop loss) before it moves to the direction predicted by you.

Imagine the market is immediately turning against after you open a trade that kind of feeling is......

A bad (though correct) entry point will make your trade less profitable. If you doesn't have good exit management, a bad exit point will turn your original profitable trade into loss.

Take a look at this chart:
http://www6.picfront.org/picture/abzKAWAcd/img/3_entry_point.jpg (http://www.friendlytraders.com/forum/redirector.php?url=http%3A%2F%2Fwww.picfront.org%2Fd%2FabzKAWAcd%2F3_entry_point.jpg)

There are 3 entry points.

The first entry point is a premature entry (early entry) as some people may believe. It predicts the breakout direction and trade before the breakout.

The second entry point is a breakout entry. When you see the market breaks out after a long period of consolidation.

The third entry point is chasing the entry. When the price suddenly goes up and make the crowd excited, they will chase for the price. This entry point is bad but you may still make profit if you have a good exit plan.

Exit point shares the same concept as entry point.

If you make a good entry and exit point, you will be much profitable.

If you make a mediocre entry point but good exit point, you will still be profitable but less profitable.

If you make a good entry point but mediocre exit point, you will still be profitable but less profitable.

If you make a bad entry point or bad exit point, you will lose money.

Finally there's a book named "Targeting Profitable Entry & Exit Points with Alan Farley". Why do I mention this book? God knows but both have something in common -- they share the same terms "entry and exit points". :D

[word]

Very informative.

[nilu_2005]

To create a complete trading system, there must be at least one method of entry matched with at least one method of exit combined to handle all aspects of a trade. Reasons to open, manage risk while open and lastly close the trade are separate acts, unrelated but combined to create a completed system of operation.
Many if not most traders get those parts confused. A method of entry has no bearing on a method to manage = exit. Some factors that do impact trade management decisions include:
1. Timeframe of anticipated trade execution
2. Timeframe of chart used, relative to 1
3. Style of trading, relative to both 1 and 2
4. Market or symbol and its behavior
5. Number of contracts / shares traded
6. Day of week, weekend or holiday period
7. Trading account size
8. Trader's mindset or emotional balance
9. Tolerance for risk, related to 8
10. All factors 1 thru 9 combined

Of the two acts that complete a round turned trade, the entry is critical. Without a correct entry approach, there can be no consistently profitable results. That said, it is the exit management of trades which usually results in net profit or net loss overall.