Entry price means nothing, it's the direction that matters!

I want to discuss a concept that I follow during my trading day. Most traders focus so much on picking the perfect entry price that they forget the main reason that a trade profits instead of loses. It's all about picking the direction. Think of it this way, before entering a trade, do you see at least a 10 point move in the direction of your trade? You need to be confident that a move in that direction will occur. Generally, this is done through your daily trade analysis. I gave up on trying to pick the "perfect price" because there really is no such thing. It's all about being able to pick the correct direction and protecting yourself if you are incorrect. I like to start with a 10 point stop maximum, usually ends up being around 7.5 points, but more often than not gets reduced to the invalidation point which is less than 10 points.

When I tried to tighten the stop up to say 2.5 points, I found that I was fixated on the price so much, that I over-traded, revenge traded, and made mistakes. With increasing the stop, I am able to focus on identifying direction rather than the "perfect entry price". If you can't pick direction correctly, you will never be able to profit on a regular basis.

A key component that I apply is sending out a "probe trade". It's a 1 contract trade with a default stop of 10 points or the invalidation point. If the direction is confirmed, I add 1 contract to the positions, making sure that my stop is now above the average entry price no matter what.

The majority of your trading day should be analysis, only a small part of it should be actual trading. Here is an example when you recognize the BOTs, but only acting on certain ones and assume bearish/bullish flags on the counter trend BOTs. You allow them to pass by, and wait for the BOT in the direction of the bigger picture.