Struggling with Entry
I’m struggling with the issue of entry. It seems like sometimes you make a strong case for “entry” not being important (a coin flip perhaps) and that risk management and exit strategies are all that matter. I want to believe this and in my trials it seems like giving any attention to entry is just a distraction because of the very reasons you outline you your books. In my mind, it always starts out with this great theory about how a particular entry signal should improve results but it seems to always get nullified after further analysis. But while this “entry doesn’t matter fact” seems like a great discovery, there seems to be many times that you write or make comments about entry strategies as if they make a difference. Can you clear this up for me? Just recently, in an answer to a blog question you seemed to imply that waiting for a trend to develop (whatever that means) will improve results.
I’m confused – can I ignore all conversation about entry? It sure would be nice. If it really just takes on the illusion of being significant then it seems like giving it any attention can only help to trigger the very emotions that I’m trying to suppress and keep me from focusing on what really matters (risk management and exit).
A: 90% of performance variation in your trading is due to position sizing. Position sizing is that part of your system that is designed to achieve your objectives. You can use position sizing to achieve your objectives with ANY system, but the higher the quality of the system, the easier it is to achieve your objectives. A high quality system has much more to do with your initial stop and your exits (i.e., cutting losses short and letting profits run) than entry.
