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“There are as many as 10 components to a professional trading system, and the entry signal is probably the least important.” – Van Tharp

So many trader’s spend a huge majority of their time on the best entries into trades when that is not really the most important thing for profitable trading. Here are ten things for a trader to consider that are MORE important than their entry price.

  1. Entry price is meaningless unless it is a good quantified entry with the odds in the favor of it continuing to go in the direction of profitability.
  2. Exits are where profits are made not entries. Profitability will ultimately determined on your skill of exits not entries. Trailing stops and price targets are more important than entry levels.
  3. The risk/reward profile being in your favor is more important the entry price. You want to risk a little for a an opportunity to make a lot.
  4. Your stop loss is more important than your entry because how much you lose when wrong determines your success more than your skill of entry.
  5. Your ability to take all entries that have an edge with discipline is more important than any single entry level.
  6. Position sizing will determine whether you can hold a winner or exit a loser with discipline. Big trades will engage emotions and your ability to trade with a plan.
  7. A trading plan will determine your success more than just entry levels.
  8. Trades must be made inside of a methodology with an edge. A single entry is meaningless outside a quantified methodology.
  9. Your ability to master your risk of ruin as a trader is more important than entries. So your first losing streak is not your last losing streak.
  10. The market environment itself trumps any entry signal. The market determines whether you win or lose not you and not even your system.