Today's Quote: “Destiny is not a matter of chance, it is a matter of choice; it is not a thing to be waited for, it is a thing to be achieved.” William Jennings Bryan

There are several good books out there about trading that should be on every trader’s must read list. If you were forced to choose one and only one, the only possible pick would be “Tools and Tactics for the Master Day Trader”. We are going to run a series of excerpts from the best selling book for the next series of lessons. Now in the words of the master trader himself, Oliver L. Velez…

THE ENTRY IS 85 PERCENT OF THE TRADE

Being a successful trader is determined by a whole host of factors, all of which must be mastered, but my experience as a professional trader has thoroughly convinced me that knowing how to enter a stock accounts for approximately 85 percent of a trader’s success. Now I am well aware of the fad that there are those who believe that selling properly is the key to good trading, but I’m compelled by my own experience to disagree. Most of the problems we encounter as traders can be directly linked to poorly timed and ill-placed entry points. By entering a stock inappropriately, a trader can actually turn a sound trade into a loser. Conversely, not so sound trades can actually turn out to be winners, if the entry happened to be at the right point and time. So it is the entry that serves as the foundation of short-term trading.

Enter a stock properly and in a timely manner, and a trader is likely to be in profitable territory within minutes (hours in some cases). Enter sloppily and at a price that is too high, and the trade is likely to go against you almost immediately. Each experience is determined by one factor: when and where you make your entry, in other words, when you strike. What is amazing is how the professional investment community has managed to get away with ignoring this most critical of all points. How many times have you heard a major brokerage firm recommend a stock as a “Buy”? But what exactly does that mean? They’ve told you what to do, while leaving out the most important factor of when to do it. Your profitability will be determined by when you buy the recommendation, not if you buy their recommendation. Knowing the “what” (buy, sell, or hold) is good. But knowing “when” to do the “what” is what will make you a great trader. So master the art of the entry and you won’t have to concern yourself as much about where to exit when you want to cash in those big bucks. In the second half of this book, we delve into the necessary components of the entry (see Chapter 14). By the time you finish, you will be well seasoned in the science of entering stocks.