Saturday 20 November 2010

Making an Entry

Making an entry is not easy, at least for me. Many people out there suffer problem of too many trades (ie. trigger happy), I'm the opposite, I suffer the problem of not entering.

Here are some analysis of ways to enter the market.
0. Moving Average Crossover - in its simplest form, price direction changes when 2 MA crossover. This has the problem of being late in entry as we'll need to enter on the next bar after confirmed cross-over. Price would have already moved a distance making our stop loss wide.
1. Oscillator - I would say this is by far the most common way of making an entry. Oscillator could be MACD, Stochastics, CCI, RSI, ergodic, ..... Similar to MA Crossover, all oscillators are lagging in someway.
2. Oscillator Divergence - an added "reason" to catch the price and enter. when Price differs with the swing made by oscillator.
3. Price Breakout - Queue at last support/resistance, wait for price to breakout. Price may break and move rapidly in our favor, it may also break slightly and turn right back against us. Price Breakout entry offer the worst stop position.

To me, all indicators or oscillator has another common challenge - the bar count. They can look quite different, and could be deploy for totally different purpose.

**I'll try to paste some picture later.