A question that every traders have to find themselves the answer is "How do I know when to buy?".
The answer for the question may be the same or may be different for each traders.
It depends on trading styles and trading system traders use.
There are several approaches or rules that use to identify the entry.
As a short-term traders, you may buy when the price is at the bottom of its corresponding channel and oscillator, such as Relative Strength Index (RSI) or Stochastic, is in the oversold zone.
In vice versa, when the price is at the top of its corresponding channel and oscillator is on the overbought zone, you may go short.
As for turtle trading system, you may enter trades when breakouts occur.
A breakout occurs when price breaks through its recent high or low.
If the price breaks its recent high to upside, you may open a long position.
In vice versa, you may open a short position when the price breaks its recent low to downside.
While the rules give you reasons to enter trades, it does not mean that the price will go in your desired direction.
The idea is "Do not predict the market".
Instead, you have to let the price movement lead your way, knowing at anytime price could change and go in a different direction.
If the price does not move in your favor, you have to give up and stop out.
That is why, I always say that a complete trading system must contain entry rule, exit rule and stop rule.
The question entry rule is the answer for the question "How do I know when to buy?".
However, to be success in trading, just this one question is not enough.
You have to at least ask yourself two more questions "How do I know when to take profit?" and "How do I know when to stop?" The answers for those two questions are exit rule and stop rule respectively.
Most traders focus only on how to entry.
They tend ignore the important of exit and stop.
Entry alone cannot bring you success in trading, you have to stick with the exit and stop that correspond to the entry.
If you are using short-term entry rule, you have to use short-term exit and stop rules.
If you are using turtle trading system, you have to use exit and stop rules of the turtle system.
The answer for the question may be the same or may be different for each traders.
It depends on trading styles and trading system traders use.
There are several approaches or rules that use to identify the entry.
As a short-term traders, you may buy when the price is at the bottom of its corresponding channel and oscillator, such as Relative Strength Index (RSI) or Stochastic, is in the oversold zone.
In vice versa, when the price is at the top of its corresponding channel and oscillator is on the overbought zone, you may go short.
As for turtle trading system, you may enter trades when breakouts occur.
A breakout occurs when price breaks through its recent high or low.
If the price breaks its recent high to upside, you may open a long position.
In vice versa, you may open a short position when the price breaks its recent low to downside.
While the rules give you reasons to enter trades, it does not mean that the price will go in your desired direction.
The idea is "Do not predict the market".
Instead, you have to let the price movement lead your way, knowing at anytime price could change and go in a different direction.
If the price does not move in your favor, you have to give up and stop out.
That is why, I always say that a complete trading system must contain entry rule, exit rule and stop rule.
The question entry rule is the answer for the question "How do I know when to buy?".
However, to be success in trading, just this one question is not enough.
You have to at least ask yourself two more questions "How do I know when to take profit?" and "How do I know when to stop?" The answers for those two questions are exit rule and stop rule respectively.
Most traders focus only on how to entry.
They tend ignore the important of exit and stop.
Entry alone cannot bring you success in trading, you have to stick with the exit and stop that correspond to the entry.
If you are using short-term entry rule, you have to use short-term exit and stop rules.
If you are using turtle trading system, you have to use exit and stop rules of the turtle system.
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