Today's Quote: “Everyone is bound to bear patiently the results of his own behavior." Phædrus.

Know that the entry is everything.

Today we have another simple statement. And unlike yesterday’s comment, this one really is simple. No psychological talk needed. This is one you need to take to heart if you don’t know its importance. It may be one of the most overlooked concepts in trading. The entry IS everything. Think about the following if you have any doubt.

1. If you enter a trade too early, before the stock has proven its direction, you will stop out of many trades. Entering the stock early changes the odds of the play working at all.

2. If you enter late, you start to affect the risk-to-reward relationship. As a matter of fact, every penny you are late has a double affect. Think about it. Every penny you enter late subtracts one penny from the reward (target) and adds it to the risk (stop). A late entry can take a good trade and reduce it to a mediocre one.

3. Beyond altering the risk-to-reward, the late entry can start to have psychological affects. There is not much more devastating then to chase a play beyond its proper entry, get in late, find you have gotten in at the high, and sit for a long time under water. Sometimes you eventually exit because you are underwater for so long, where the proper entry would have had you in the money that whole time.

Some people feel that you must see volume come into a stock before entering. This is not a proper way to trade. You must learn to recognize the patterns that will attract traders and get there first. That big volume surge should be taking you to your first target not making up your mind about entering.