Is the Entry or Exit More Important in Trading? Hint: It’s the Entry
Many have differing opinions when it comes to trading, but one thing that’s agreeably important is the entry. When your entry is good, your chance of success goes up astronomically. The better the entry you make, the more profit you’ll make, simple. Trade exit is still important and should be taken advantage of, but it’s important to always optimize your entry.
- Some say that monkeys throwing darts to pick stocks will do better than the average fund manager. This illustrates the point that exits are much more important.
- There are educators who do exercises like this to show the importance of optimizing exits. While the educators are making a very important point, some developing traders might misinterpret this to mean that exits are more important than the entry
- Finally, there are studies that show that a random entries can show profitable results. One example is in the book Trade Your Way to Financial Freedom.
“You need to have a complete system that has a statistical advantage, before putting any significant money behind it. In addition, you have a winning mindset and be in peak physical/mental condition.”