Few Ways to Enter a Trade….
By Ilan Levy Mayer, Vice President of Cannon Trading
There are so many different aspects to trading.
From financial, emotional aspects to actual details of when to enter a trade, when to exit a trade and SO MUCH more in between….
An important part of trading is trade entry. Assuming a trader knows why he/ she about to enter a trade the next step sounds simple right? Simply buy or sell the contract you wish to trade….
Many times, it is that simple; depending on the time frame you are trading you may simply buy @ market and get the market price at that time. Some traders try to make small profits where every tick counts hence they may use the “buy bid” or “sell ask” button in order to get in at the best market price at that time. Many times, you may save a tick by doing so but other times you may find yourself chasing the bid or the ask…
Limit Orders
Another way is for a trader to decide that yes, she wants to enter the specific market, but she would like to get in at a price that is better and will use a limit order. Example may be trader got the signal she was looking for to sell the mini SP 500 futures. The September contract was at 1982.75. Trader decided that she is willing to take the risk of not getting into the trade, but she will only sell if the market hits her limit price of 1983.75 for example.
There are times that this patience will allow for a better entry price, hence better chances to meet target but there are times that trader will not get in and “miss a possible winning trade”.
Entering on a Stop
One more common way that some traders use is to enter on a stop. Most beginner traders will use stops for protection and not as much for trade entry. Traders with a bit more experience will at times use stops to enter a trade. Example may be that Joe decided to buy crude oil futures because he got his condition met (crude in this hypothetical example is trading at 93.42), however Joe would like to see that price action follows the signal and break a minor level on the chart which he thinks serves as minor resistance at 93.49.
In this case Joe will place a buy stop at 93.49 that if triggered will enter him into a long trade.
Again, there are so many more ins and outs to trading in general and to trade entry in specific and I hope this quick overview may have opened your mind to different ways of entering a trade.
Overview – Trade Entry Methods
Market Orders
The simplest way to enter a trade is through a market order—buying or selling the desired contract at the current market price. This method is often used for trades in shorter time frames, where speed and execution are essential. Some traders aiming for small profits may use the “buy bid” or “sell ask” functions to secure the best possible price, though this strategy can sometimes lead to chasing the market and missing the optimal entry.
Limit Orders
Another method is the limit order, which allows traders to specify the price at which they wish to enter the market. For example, a trader receives a signal to sell the mini S&P 500 futures when the September contract is at 1982.75 but chooses to wait for a better entry at 1983.75. This approach can result in a more favorable price and increased chances of achieving the target but carries the risk of missing out on a potentially successful trade if the market does not reach the limit price.
Stop Orders
Some traders use stop orders not only for protection but also as a deliberate entry strategy. More experienced traders may place a stop order to enter when specific price action confirms their trading signal. For instance, Joe decides to buy crude oil futures at 93.42 but wants to see price action break a minor resistance at 93.49. In this case, he places a buy stop at 93.49; if triggered, this order executes his long trade. WATCH THIS VIDEO
Conclusion
There are many nuances to the practice of trading and trade entry. This overview provides a glimpse into several common methods, highlighting that there are numerous ways to approach entry, each with its own advantages and considerations.
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