When To Enter And Exit A Trade?

The first question is, how do you decide when to exit, enter and exit a trade? And there's lots of different ways or mechanisms for making trading decisions. But as I've alluded to in many different videos and responses to questions, having a set of rules that tells you when to get in and when to get out is by far and away the best way, the best way for retail traders to be consistent. Because our emotions get in the way. You know, we have things going on in life, we have business, we have stresses, we have positive and negative emotions. And all of that will come into our trading decisions if we're not careful. But we can get rid of it, sweep it all aside by having a set of rules that tells us when to get in and when to get out. Now, the trick is those rules have to be profitable. And so you've got to take those rules and test them over lots of market history and evaluate whether they're actually profitable over a long period of time. A big mistake a lot of traders make is having a set of rules or an indicator or a trade advisory service and saying, oh, look, over the last three months, this has made x percent return. They're obviously, it's obviously a really good approach. I'm just going to follow this approach. But 3 months in market time is microscopic. It's very, very small. When you think about, are my rules profitable? Will I build my wealth? Will I make money with these rules? You want to think over decades, not over months. Because there's bull markets, there's sideways markets, there's bear markets, there's quiet markets, there's volatile markets, there's pandemics, there's declining interest rates, there's rising interest rates. There's all of these things happening in the world. And we need to make sure that whatever rules, whatever approach we're following, will keep us, our account alive and growing throughout all of that, or at the very least, keep it safe and in cash when it's out of sync with the market and get us back in when it's in sync with the market. So the best way to decide when to enter and when to exit is to have a set of, a back test of set of trading rules, a trading system, if you like that, that tells you when to do that and just apply those rules consistently day after day to make your trading decisions. It takes a lot of the brain work out of it. It certainly shrinks the time. You know, I started off trading by looking at charts, looking at indicators, drawing trend lines, doing analysis, reading broker reports, all of these things 20 odd years ago, and in order to find one or two trades to make the next day, I was spending hours every night doing analysis hours. But when you approach the market systematically, those hours shrink to minutes because all you need to do is update your data for the previous day, run your scan to see what your buys and sells are for the next day, place the orders with your broker, close the computer. It's a far simpler way to trade because all of the work and thinking is done upfront in the design and testing of the rules. The day to day implementation is dead easy, so that's the best way to decide how to enter and how to exit the trade.