Home > Lessons from the trading floor > Great entries are a small part of great trades

Great entries are a small part of great trades

Trading stocks for a living can be one of the most rewarding experiences of your life if done properly. If you are trading all day every day for years and not making progress you are “practicing wrong.”

Of course by progress I am referring to earning consistent money.

Many of us here at Keystone have played competitive sports at one time or another, for me it was baseball and I often use baseball analogies to make a stock trading point. Today I am going to use football. Before I get to my point I was actually asked by someone at a BBQ this weekend what makes a successful trader?

While there is no “one” answer I feel one of two backgrounds give an individual a HUGE advantage; having previously owned a business or having been an athlete (especially if you went on to play at the high school, or college level and beyond).

Having owned a business you learn the importance of understanding how you will compete, how you will stand out in the market place to generate revenues; in other words you really need to dig deep to define an edge. As an entrepreneur you also learn what it means to put in an 80 hour week and sometimes not get paid, you learn very quickly the skill of paying attention to what is working and what is not.

As an athlete I feel focus, discipline and most importantly the ability to bounce back from adversity can be translated into a trading asset.

Getting back to the football analogy and your entries. far too much emphasis is placed on the entry signal. A football game usually lasts just over two hours when you remove all of the commercial breaks, each actual play is basically 7-10 seconds.

What does this have to do with trading? Everything as far as “practicing and focus.” The hard work, or better worded the reason you will earn money on on most trades is because of the hard work you do BEFORE you begin to look for an entry signal.

All football plays are mapped out for the coach before the game starts, your trading should be the same way. You want to be executing your ideas during the day, not finding new ones. If you are looking for ideas you are in a horrible environment or you are not prepared.

If you want to become someone who gets paid each month spend most of your screen time learning to identify great scenarios, one that have a high probability for follow through instead of focusing so much on your P&L and where to enter. In other words focus on IF there is something to do as opposed to where to get in.

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