Let me talk about entry timing and what an effective way looks like for you to enter your trades. What am I looking for when I'm entering my positions, and how can we optimize our decisions to be consistent with our trading process?
The primary objective here is to make sure your entry timing isn't waiting for someone else to say they're in a trade. It's about being deliberate when you choose your entry trigger and not chasing the idea.
Find Your Reference Price
First things first — box in your trade. If I'm going to enter a position, I want to find my reference price — the point where I've seen price action bounce. Where has resistance turned into support? Where do I have evidence of dip buyers protecting that area?
Let's say I'm looking at a breakout. My reference price might be a doji high where I've seen price action find support multiple times — one, two, three times. That then defaults into being what I'm looking for from an entry perspective.
So now I know three things:
- My stop loss location (where my idea is invalidated)
- My profit target (the DTR opening range target)
- My ideal support zone for entry (the reference price)
Set Everything Up Before It Becomes a Decision
Here's the critical part that most traders skip. I set up my stop loss, my entry, and my position sizing before price gets there. This means when the moment arrives, I'm not doing math or making emotional decisions — I'm just executing.
If my reference price is at 6021 and my stop loss is at 6019, that's about $100 of risk per contract. If I want to stay within my $500 max loss, I'm looking at 5 contracts. All of this gets calculated and entered into my order window ahead of time.
Buy Discounts, Not Chases
Now here's the framework that changes everything about your entry quality:
- Best entry: Under the reference price (a discount)
- Middle entry: Between the reference price and the next level up (a compromise)
- Bad entry: Above the reference price (a chase)
Any discount I get under the reference price is a good entry. Any entry that's above or chased past that reference price is a bad entry. This is a binary trigger — either price goes under my reference price or it doesn't.
When I'm calling out trades in the stream, I'm always trying to give you this reference price. That's the point I'm setting my risk management off of, and I'm looking to buy discounts relative to it. If you want to outperform my entry timing, use that reference price and look for good prices relative to it.
The Dollar Risk Trigger
There's an alternative approach if you have good trigger discipline. Instead of watching the actual price, you can watch your dollar risk figure.
Set your order up with your stop loss and position sizing already defined. Then watch the risk number. If I know my max acceptable risk is $500 per trade, I'm waiting for that risk figure to show less than $500, and then I click submit.
I've seen this work beautifully — getting entries at $375 worth of risk instead of $500 just by being patient and waiting for the overreaction relative to my reference price.
The Pullback vs. Aggressive Entry
This process works in both directions. For a short setup:
- Identify the confirmation candle and the profit target
- Set the reference price — typically the previous low of the green candle that preceded the breakdown
- Calculate position sizing based on the reference price to stop loss distance
- Wait for price to return to the reference price zone
If 5 contracts puts me over my risk threshold, I adjust — maybe drop to 4 contracts to get to $450 of risk. Always adjust the contracts, never ignore the risk.
Making It a Binary Decision
The beauty of this system is that it turns every entry into a simple yes-or-no decision. Either I get my discount relative to the reference price, or I don't enter. There's no gray area. There's no "well, maybe I should just get in now before it runs away."
That kind of FOMO-driven thinking is exactly what this framework eliminates. You'll miss some trades — and that's fine. The trades you do enter will have better risk-reward from the start, and you won't be chasing.
Build the Muscle Memory
The only real variable is how much I think the market is going to pull back — and that's a little bit of intuition, a little bit of gut feel. On more volatile days, you might look for deeper pullbacks. On quieter days, you take what the market gives you.
But the process is always the same:
- Find your stop loss location
- Find your profit target
- Find your reference price
- Build position sizing off the reference price
- Buy discounts relative to it
Practice this with your paper trader. Start getting into the same routine and rhythm. If you do this a couple of times for each ticker, you're going to build up that mental math calculation and it's going to be a much faster, less stressful process for you.
That's exactly how I do it on a daily basis. Practice, practice, practice — and you'll build up confidence and improve your entry timing along the way.
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