Perfect Trading Entry â € "What's the secret?

So what is a perfect trading entry and what is the secret to finding it? While this may come as a disappointment, it is better that you learn the truth so let me say this, "the secret is, there is no such thing as a perfect trading record. Yes, you read correctly, so you can save a lot of time and effort if you accept the fact that you're not going to discover the holy grail of trading. It is true that perfect indicator that tells you when to jump in and when to get out, simply do not exist. 

Again, if you're still relatively new to trading, you need to realize that a perfect indicator simply do not exist. 

Why is it that so many still continue to believe in such indicators?

Famous trading guru and accomplished author, Dr Van Tharp is of the opinion that this belief in an ideal trading post, especially among novice traders from those who believe that as long as they are involved in the selection and entered into a trade, they have a degree of control over the markets. In reality, though Van Tharp goes so far as to call it "lotto bias" and stated that the same trend can be seen in people choosing lottery numbers based on birthdays, anniversaries or other numbers that they consider to be relevant. 

Why do so many lottery players choose numbers from birth dates and the like? Simply because they believe whole-heartedly that it is the best numbers. Obviously, whatever they want to believe their combination of numbers is the same chance as any number of combinations. Unfortunately, because there is an emotional connection, these players have a tendency to feel like they have some control over the outcome. The same goes for traders and trade entry. 

At the time when you are about to enter a trade, you are in complete control of every trade entry. But when you take the plunge, you must let go. When you're actually in a trade, you no longer have any control over the markets. They will do exactly as they please and there is absolutely nothing you can do to change it. 

Interestingly enough, the amount you rake in from a trade is not determined by where you buy your stock, but rather it is determined by how much you put in, and when you quit. 

Let us take a look at the following example:

Okay, so you're ready to buy some shares and by implementing the system you are using, you know that you must buy the stock at $ 10 per share, and that you should quit when they reach $ 12 per share. In this example we will look at two different scenarios. In the first, you have $ 1000 and in the second, you have $ 10,000.

1. Buying at $ 10 per share, your $ 1000 gets you 100 shares, which in turn means that when you sell at $ 12 per share, you will have made $ 200 profit.

2. Buying at $ 10 per share, your $ 10K you get 1000 shares. In this case, when you exit at $ 12 per share you will be $ 2000 richer. 

So, now you have it. Their trade entry does not determine how much profit you make, but instead, it is the amount you invest, which will determine your profit. This is undoubtedly your cornerstone of an effective money management.