Using Entry Orders
Entry orders free up your day by saving you time.
Entry orders can give you better entry levels for your trades, saving you money.
Entry orders require a pre-set trading plan which keeps you accountable to your strategy.
Traders can strategize all they want to come up with a great trading plan, but if they can’t execute that plan effectively, all their hard work might as well be thrown out the window. The Forex market is open 24 hours a day, so this means no trader can keep an eye on it all the time. So we need a way to execute our trading plan that fits with our personal schedule.
This is where setting up entry orders comes into play. Entry orders allow us to set the price that we would like to buy or sell ahead of time and will only get us into the trade if that price is hit. There are several benefits to trading using Entry orders, and that is what we will discuss in this article.
Benefit 1 – Entry Orders Save You Time
The first benefit should be pretty obvious. Entry orders save us time. We do not need to be at our computer when a trend line is hit or when price breaks out of its price channel. We can very easily add an entry order to get us in the trade if price behaves in the way we think it will. The order does the waiting for us and allows us to get back to spending time with our family or spending time at work.
We can also take things one step further by setting contingent stop and limit orders to manage our trade if our entry order is triggered while we are away. This gives us peace of mind that we aren’t floating a naked trade without managing orders attached to it. To do this, click the advanced button while placing an entry order. The option for setting a stop and a limit will be added.
Stops and limits set in this manner are not active until the entry order is triggered and opens a trade on our account. So we do not need to worry about a stop or limit being triggered before our entry order is hit.
Benefit 2 – Entry Orders Save You Money
The next benefit that Entry orders gives us is that they can save us money. This is a topic I teach in many of my trading strategy webinars. To understand this better, we need to think about how much time throughout the day we have to dedicate to Forex trading.
12 hours? 6 hours? 1 hour? 10 minutes? Most of us probably fall near the lower end of the spectrum between 10 minutes to an hour (if we were looking at the average amount of time per day). This is because most of us have a day job, a family, or prior obligations we must attend to.
We must now compare that amount of time to the 24 hour day that the fx market is open. If you said you spend 10 minutes a day placing your trades, you are watching the market 0.7% of the day. If you said you spend an hour a day placing trades, you are watching the market about 4% of the day. Knowing this, what are the odds that you are going to be looking at the market at a time that is optimal to physically place a trade? The odds are probably not very good.
It is much more likely that the optimal time to enter a trade will fall sometime during the other 96% of the time when you are not at your computer. If we force ourselves to trade during this small viewing window, we are most likely getting sub-optimal entries. Sub-optimal entries means we are leaving money on the table.
I see so many traders do this. We get on the computer and start looking for setups with a goal of placing a couple trades before we need to sign off. When in reality, we should be eyeing potential setups that we can get with an entry order. We should try to receive the most ideal price possible even though it might not be available while we are physically sitting in our computer chair.
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Benefit 3 – Entry Orders Keep You Accountable
Every strategy we use should have hard set rules before we begin trading it. This means we know exactly what we are going to do in any type of situation before that situation arises. But at times, our emotions (greed, fear, over-confidence, etc.) can lead us away from our trading plan and result in us taking stabs at the market hoping to “get lucky” rather than taking a calculated risk where we believe to have an edge. Entry orders (with stops and limits attached) mostly eliminates this as a possibility and lets our strategy stand on its own without emotional interference.
Entry orders are a great way to keep us accountable to our strategy and make sure we are following the rules to the letter.