Quot;Guaranteed" Entry into Major Trends

Over the long run, your overall performance will be greatly influenced by less than 5 percent of your trades. You only have to miss a few big trades to seriously degrade overall performance. Your entry method and trade implementation should be focused on ensuring entries into the major trend. If one does not have a position in a particular market, that seems to increase the odds for the onset of a major trend.

When you design your system, try to use orders that will ensure you an entry into the desired trade. For example, an order to trade at the market, trade on the open, trade on the close, or trade on a stop will usually get you into a trade. Of course, the amount of slippage will vary, but if you are not doing great size, you will consistently enter the trade. If you rely on limit orders, you could easily miss a major trading oppor­tunity by a few ticks. The cost of a lost opportunity is often greater than

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the few ticks you save using a limit order. However, if you are trading liquid markets and have a real-time data feed, you could try to fine-tune your entries. But for most traders, an order entered with a broker seems to work best.

The greatest slippage occurs not in the markets, but at the source:

with the trader. If you fail to place an order, or place a wrong order, or place the order incorrectly, then these errors will often cost you more than any slippage in the markets. Hence, you should strive to control slippage at the source. The no-exceptions policy will help to reduce slip­page at the source.

It is a good idea to prepare an order entry sheet the previous day, and transmit it to your broker before the markets open. There are many advantages to preparing your orders when the markets are closed.

(1) You can create your order entry sheets calmly and unemotionally.

(2) You can stick to your trade plans and avoid deviations. (3) You can double-check your orders for mechanical errors. (4) You can avoid trades made at the spur of the moment, without detailed analysis. (5) If you do plan subjective trades, you can write down detailed entry points or exit points, or other cues for trading. You can ensure entries into major trends by preparing your orders in advance and entering them before trading begins for the day.