Today's Quote: “There is little difference in people but that little difference makes a big difference. The little difference is attitude. The big difference is whether it is positive or negative." - W. Clement Stone.

Let’s continue our talk on entries. Yesterday we discussed that need to have a strategy before we attempt to find an entry. But entries are so much more.

The entry is everything. How is that? The right entry gives you the tightest stop. It gives you the greatest target. As a matter of fact, every penny you wait past the perfect entry actually costs you two cents in terms of reward-to-risk. It adds a penny to the stop and takes away a penny from the target. A ‘double whammy’. But if you get in to the trade a penny too soon it costs even more. You now have a stopped out on a play where you would have not if you had waited.

Every entry is designed to compliment the strategy. When going long we are always looking for the stock to prove itself. We want the stock to show a new ‘sign of strength’ (or sign of weakness if going short.) Enough to give us cause to think it will keep going. On the other hand, we cannot wait too long to enter or our reward-to-risk diminishes. We cannot just ‘jump in’ after an extended move on the hopes it will keep going. Where is your stop if the rally does falter? What is your target? Most of you are aware of these concepts. This is the reason why you can’t just jump into extended moves without a plan. It is the reason the market is not a core long at any point over the last several weeks. It may be going higher, but the entry was long ago. In theory there is only one perfect entry. In practice there are several we may try, but all in a focused area, all early in the move, and all with a plan. You may have a strategy, you may have a trend, but you have nothing without an entry. You need an entry that compliments the stop and target. There will be more to come tomorrow on the topic of entries.