On entering a trade, make the market first come to you. Making the market first move just a bit in the direction you want it to trade is a very good "filter." If the market never does move in your desired direction, then you will not have made a losing trade.

- Jim Wyckoff

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There is an old market adage that goes something like this: "Any fool can get into a trade, but it's the real professionals that know when to get out." There is no denying the merit to this old saying, but it should not imply entry strategies are unimportant to trading success. In this educational feature, I will focus on some of my market entry strategies, and also on helping traders refine their own market entry strategies.

During a "pause" in price trend, make the market again begin to move in the direction of the trend before entry. Most successful traders use some sorts of trading techniques that track market trends. ("The trend is your friend.") During an existing trend, many traders (including me) like to see the market "correct" or reverse course a bit (also called a pause), before entering a trade to attempt to ride the current trend to profits. The advantage to this entry strategy is that you are not chasing a market, and you do make the market again move a bit in your desired direction before you jump on board. This strategy can also eliminate many losing trades that would have occurred had a trader just entered a trade "at the market," after a specific trading plan of action was conceived.

For example, if a market has been trending higher but is presently in a pause mode, a good entry level on the long side would be just above the past week's high. If the market has been trending lower and is in a pause, a good entry point on the short side would be just below the past week's low. For those who do not have real-time price data or who do not have the luxury of watching a price screen most of the day, or for those who have "day jobs," the use of buy stops or sell stops can be effective in entering a market at a desired general location.

Using support and resistance for entry points. Utilizing support and resistance levels on the charts for entry points is common among all traders. If prices can push through a support or resistance level, then that is a clue the market has the strength to continue to move (trend) in the direction that the support or resistance level was just taken out. If the market does not have the strength to take out a support or resistance level, then it may be a good idea to wait until the market does show the strength to make such a move -- before entry into a trade is executed.

Buying or selling on price "breakouts." I've discussed this entry method in other features, but it's worth repeating here. If prices have been trading in a choppy (non-trending) fashion for a longer period of time, it is likely there will be a key resistance level overhead and a key support level below the market -- both of which are keeping prices trapped in a trading range. If prices can move out of the trading range, then odds are good that prices will continue in the direction of the "breakout" from the trading range. Market entry after a price breakout is a popular method of trading. However, traders have to beware of the "false breakout," which is not an uncommon occurrence. Waiting for one session of follow-through strength or weakness to confirm the price breakout is a good filter to help eliminate the false breakouts that can stop a trader out of a position in a hurry.

Entry into trades with market orders or stops. There is no single right answer on whether entry with market orders ("at the market") or with buy or sell stops is best. Again, for those traders who have day jobs or who do not have real-time price data (most of my readers and most traders do fall into this category), then stops are usually a good way to enter the market. Buy and sell stops are also beneficial due to the fact that traders can formulate their trading plans, in advance, and consider an entry point with stops. Trading plans that are well thought out -- usually after market trading hours -- are usually the most successful ones.

Be patient on market entry. Patience is a virtue in trading. The majority of futures traders are impatient. That's the nature of most people who get involved in futures trading. Most futures traders are also ambitious. That's also why they trade futures. They don't like to sit around and "twiddle their thumbs" or lie around on the couch and watch TV during their leisure time. Traders like the "action" of trading. However, patience on market entry is a virtue that can pay dividends in the end. Of all the years I have traded, I can think of very, very few times when I "have missed the boat" on a market entry into a trending market -- and was not afforded a good opportunity to enter at a later date. Those who think they have to immediately jump on board the "money train" that is leaving the station right away are usually exhibiting impatience that could well turn around to bite them in the end.

The risk of loss in trading commodity futures and options can be substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

Jim Wyckoff is a contributing analyst for RJO Futures . He has spent nearly 25 years involved with the stock, financial and commodity markets. He was a financial journalist with what is now the Dow Jones Newswires service for many years, including stints as a reporter on the rough-and-tumble commodity futures trading floors in Chicago and New York. As a journalist, he has covered every futures market traded in the U.S., at one time or another. Not long after he began his career in financial/commodity market journalism, Jim began studying technical analysis. By studying chart patterns and other technical indicators, Jim realized the playing field could be leveled between the "professional insiders" in the markets and traders/analysts like him.

Get Your Futures Trading Road Sign Guide.

Enter? Exit? Or just WAIT? The Futures Trading Road Sign Guide, a group of articles compiled by Jim Wyckoff and offered through RJO Futures, is the perfect "road-side" guide for your futures trading travels to more successful trading. Including information about Wyckoff's favorite setup for better entering and exiting of trades, you won't want to hit the trading highway without this educational tool.

Get Your Copy.