Learn the most powerful trading entry strategies for better market timing and bigger profits. By the end of this trading guide, you’ll learn the skills you need to better time the market; the best entry levels stocks; the ultimate trade entry checklist; how to improve trade entry and the trade entry system one of our pro traders uses.
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Without a good trade entry system, you’re left at the mercy of the market. The trade entry system is the most important skill to master because it will enable you to capture more profits.
Remember, if you get a good entry on your trade, even if the market reverses, you can still get out of the trade either with a small profit or just a small loss.
In this case, your trade entry is your edge!
For forex trading, you can check Forex Entry Methods - Where and How.
Let’s get the ball rolling and see what are the best entry-level stocks and the ultimate trade entry checklist for better market timing.
What is the Best Entry Level Stocks
You don’t want to entry stock early as this means you’ll have to get some heat and accept that the market will go against you and possibly hit your stop loss. But, at the same time, you don’t want to entry stock too late, where the stock price has already moved and you’re chasing the market.
The sweat entry spot is not in the middle either.
But, the best trade entry is near the low (high) or right before the market is ready to take off.
If your trade entries are close to the low (high) then:
- We’re going to make more money.
- And, secondly, we can increase our position size and subsequently increase the potential profit.
This trade entry checklist will take your trading to the next level.
The Ultimate Trade Entry Checklist
If you want to improve your stock entries just follow these 5 trade entry checklist:
- Know what’s your entry trigger.
- Know where to exit if you’re wrong on the trade.
- Know if you’re trading from an area of value.
- Know your profit margin aka risk-reward ratio.
- Know if you’re trading with the trend or against it.
Ultimately, if you follow these 5 simple checklists, it will change the way you trade.
So, make sure you only take a trade entry if it passes this 5-step checklist.
Remember that no matter what market you’re trading (stocks, cryptocurrencies, options, futures, etc.); the same entry strategy checklist can be safely used.
Probably, the best entry stocks checklist is to know your entry trigger.
In other words, you need to know why you’re entering the trade.
If you’re basing your entry strategy on your feelings, that’s not a proper way to approach the market.
Let me explain:
If you just feel that the stock market is going up and you jump into a trade, that’s gambling, not trading.
If you’re trying to trade like a business, you need to have detailed reasoning behind every single trade.
We’re going to explain the importance of having an easy trade entry in the markets.
Why Trade Entry is Important?
It’s important that your entry-level stock trading is on point.
However, the stock trading community might be split on the real role of stock trading entry strategies and why they matter.
Many stock traders might argue that way more important than entries are other things like:
- Risk management is more important than the entry strategy.
- The exit strategy is more important than the entry strategy.
- The risk-reward profile of the trade is more important than the entry strategy.
- Position sizing is more important than the entry strategy.
While all of these are components of a good stock trading strategy, most beginner traders will not lose money because their exit strategy is not on point or because they use the wrong position size.
The biggest destroyer of brokerage accounts are:
- False entries
- And, early trade entry
Just think about this for a second:
How many times have you been stopped out of a good trading idea, just because you entered earlier?
Most likely the fear of missing out (FOMO) got you into the trade.
You were right on the market direction, but because your trade entry system was bad, you ended up losing money.
See the example in the chart below:
Think about how many times this happened to you?
You’ll see this is a real problem that most traders face.
Don’t get it wrong, risk management, exit strategy, position sizing and all other components of a successful strategy are important, but without a good trade based entry strategy, those won’t help you much.
We know that traders love instant gratification, which seeks pleasure and avoid pain.
The perfect entry can feed on the instant gratification desire, so we want to teach you how to improve trade entry.
How to Improve Trade Entry
If you want to see a profit right from the start, you need to work on your timing.
The best thing you can do to find the best entry-level stocks is to be proactive, not reactive.
Let me explain:
Being proactive means planning ahead for your trade entry.
You have to anticipate and predict the stock prices of interest.
Setting up stock trades after the market closes is an easy way to remove noise and it’s an effective way to improve your entry. You’ll not second-guess yourself as compared to being a reactive trader.
The reactive trader as the name suggests reacts to the constant ebb and flow of stock prices, working in “the now.”
More often than not, reactive traders will end up jumping into momentum plays that will reverse on them, leaving this type of trader frustrated.
See below our second trade entry tip:
Use Limit Orders to Improve Trade Entry
The second tip to improve trade entry is to use limit orders.
Simply put, limit orders allow stock investors to buy stocks at the best possible value.
So, make sure your stock brokerage trading firm offers good order execution quality.
Another way to improve your trade entry is by using technical indicators.
Top 3 Indicators for Trade Entry
You can enter at the best possible price by using one of the following technical indicators:
- Williams %R – we have two interesting approaches HERE
- Rate of Change (ROC) – for long term stock investing
- Relative Strength Index (RSI) – check our amazing 2-period RSI entry technique HERE.
These technical indicators help us pull the trigger on our trades on a daily basis.
Important note: Technical indicators should be used in conjunction with price action analysis and never alone.
We’re going to share some tips with the best times of the day to buy stocks.
When is the Best Time to Enter a Trade?
The best time to enter a trade is usually during the first hour of trading between 9:30 AM EST to 10:30 AM EST, and the last hour of trading between 3:00 PM EST and 4:00 PM EST when volatility picks up again.
Actually, based on a recent stock market research put together by the Wall Street Journal in collaboration with Pragma LLC, the last 30 minutes of the trading day is the busiest time of the day.
We borrowed the chart below from the WSJ.
So, between 3:30 PM and 4:00 PM EST, about 23% of the total trading volume is changing hands each day.
In other words, one of the best times for trade entry is right before the closing bell when end-of-day prices are decided for thousands of stocks. These are good day trading entry strategies.
Likewise, stock prices also exhibit day-of-the-week trading patterns.
Let me explain:
Statistically, not all trading days are created equal.
The day of the week effect supports the idea that if you buy stocks during certain days of the week, you’ll have a higher probability to make money.
So, the best day of the week to buy stocks is during the last 30-minutes of the Monday trading session. Historically, stock prices have the tendency to fall during the first trading day of the week and reverse by the next day – on Tuesday.
Logically, selling stock on Friday before Monday’s sell-off is the right thing to do.
Here are a few other tips for trade entries at the best possible time:
- The intersection of two trendlines
- A confluence of multiple technical factors
- Psychological levels
- Price action
We’ll share the only trade entry system you need to catch tops and bottoms.
Trading Entry Strategies
Building a trade entry system is the same as building a house.
Building a house is a complex process, and the same is with building trading entry strategies. With a house, the first thing you start building is the foundation, but with a trading strategy, the process starts with the entry idea.
Don’t get the wrong idea, your trade entry system can be as simple as buying stocks at the close of the current candle and still make money.
See for example our 3-bar entry strategy for taming the beast on Wall Street aka the S&P500.
Here is the first tip for finding better trade entries:
To improve your timing, we look to downgrade the timeframe used to a lower one. Basically, if you trade from the daily chart, you can drop to a 5-minute time frame and look for the same entry signal to show up on the lower chart.
Note* We’ll not go through how to analyze the market, but instead we’ll just focus on the trading entry strategies.
So, after you already have done your homework and identified the reasons why the market will go up (down), it’s time to focus on your trade entry.
We don’t want to buy or sell stocks on our gut feel but rather because our edge or trading system tells us so.
Without further ado, here are 3 trading entry strategies to try.
Trade Entry System #1: OHL Entry
In simple terms, the Open High Low entry is a day trading strategy that allows you to buy and sell stocks within the first 1 – 5 minutes after the opening bell.
The entry rules are simple:
- Buy entry signal is generated when the opening price is the same as the lowest price. Buy at the break of the first 1-minute candle high.
- Sell entry signal is generated when the opening price is the same as the highest price. Sell at the break of the first 1-minute candle low.
You can learn more about the OHL strategy HERE.
Trade Entry System #2: The 3-period RSI Entry Technique
The perfect moment to strike with the 3-period RSI strategy is when the daily 3-period RSI value is less than 20.
Having this type of entry confirmation can shelter you from some of the damage you can run into from entering the market too early.
On the following day, a buy stop is placed above the high of the first hour’s trading range.
When you see this entry signal you can pull the trigger with self-confidence.
Trade Entry System #3: The 3-Bar Reversal Pattern
Another simple strategy that will give you an earlier entry is the 3-bar reversal pattern.
Here is how you can recognize this chart pattern:
- The middle candle is at the lowest point
- The two candles on each side have higher lows
- The third candle closes above the high of the first candle
The entry is triggered at the open of the 4th candlestick or bar.
See the stock entry example below:
Final Words – Trade Entry System
In summary, trading entry strategies is a tricky topic, because timing the market with sniper precision is only possible once you have years and years of trading experience under your belt. Your profits are the difference between the entry and exit points, so working on your trade entry can definitely maximize your profits.
So, here is a short summary of what you’ve learned today:
- Only take a trade entry if it passes the 5-step checklist
- Entering near the high or the low of the day maximizes the profit potential
- Be a proactive trader and plan ahead your entries
- Use limit orders to improve your entry
- Top 3 indicators for stock entries RSI, ROC and Williams %R
- The last 30 minutes of the trading day is the best time of the day to enter the market
- Best trading entry strategies: OHL entries, 3-period RSI entry and 3-bar reversal pattern
Thank you for reading!
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