Why You Should Consider Second Entries

February 10, 2003
Don Miller

I thought about simply copying
one of my last several articles this morning as the theme remains the same, so
in case you’re wondering as you read this, it is indeed a new column.Â Yet
there’s frankly not much more we can say to change our theme of not being
interested in longer-term long reversals until we get a change in the hourly
picture, including a successful test on any reversal probe.Â

As such, longs remain contra-trend scalps only into
the hourly downtrend support using the one- and three-minute (and 13 if
you’re bold, as the window of scalp opportunity between the opposing 13 & 60
trend supports has narrowed), while shorts continue to have the longer-term
wind at their backs with major trade resistance defined in the more loosely
defined (relative to trend indicators) extreme momentum and band indicators.

On the lesser timeframes, this morning provided an excellent example of the
necessity to consider second entries on the three-minute short trigger (noted
below), which given recent rhythms could be a high probability strategy in and
of itself.Â Which brings up an interesting question: Since one can of course
only “define” second and third entries in hindsight, how should one trade such
sequences?Â For example, should one solely trade latter entries which likely
reduces sample size while increasing probability? Or should one simply take
every trigger for an increased sample size and reduced probability? Of course as
is the case with most trading aspects, the decision is highly personal and
either method will likely result in similar outcomes, keeping all other
variables constant.

I’m personally more of a frequent trader, taking the first entry, stopping on
any momentary reversal (of course, we don’t know if it’s momentary until after
the fact), and then reentering should the premise reassert itself — which is
what I did this morning.Â Such a style of course results in additional trades and
commissions and a lower win/loss ratio compared to the other option — all of
which are compensated for the times there is no subsequent entry setup.

Lastly, we’re continuing to make preparations for our

weeklong virtual trading experience March 3 – 7. In addition to the weeklong
effort itself that will include live trading and day and evening seminars, I’ll
be providing a free 90-minute one-on-one consultation after the conference
concludes, to follow-up on a more individual basis in the spirit of making the
experience as complete and helpful as possible.

ES (S&P)Â Â Â Â Â
Monday February 10,Â 2003Â 11:30 AM ETÂ Â Â Â Â Â Â NQ
(Nasdaq)