Trading involves a multitude of considerations, ranging from financial and emotional factors to practical details such as entry and exit points. One crucial aspect of the process is determining how and when to enter a trade, also known as trade entry.

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 6582.75, but chooses to wait for a better entry at 6583.75. 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 63.42 but wants to see price action break a minor resistance at 63.49. In this case, he places a buy stop at 63.49; if triggered, this order executes his long trade.

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.