Mastering trade entries: Avoiding common mistakes that may sabotage trading success

Introduction: Understanding the Impact of Entry Errors

Trade entry is a critical moment that is undoubtedly contributory to the success or failure of a trade (although exits remain an additional key component of course). 

Whilst many traders focus much energy and effort on entries, the importance of a well-planned and so called ‘high probability entry’ is often underestimated. Poor entries can put traders at an immediate disadvantage, increasing risk exposure, reducing profit potential, and fostering a cycle of emotional and often questionable decision-making at this critical point of any trade.

This article delves into the most common entry mistakes traders make, why these errors occur, and, more importantly, how to avoid them. Many of these are insidious but if remain unchecked can lead to disappointment in trading outcomes, and at worst, may result in significant trading losses if they are not addressed over time.

Through developing a greater understanding of the psychological pitfalls, potential technical missteps, and strategic errors made behind poor entries, traders can take actionable steps to enhance their consistency and performance in the markets. 

Whether you’re a beginner or an experienced trader, mastering your trade entry process can have a profound impact on your long-term trading outcomes and ultimate success or otherwise. The great news is that many of these are not “hard” fixes. 

Although by no means an exhaustive list, and often connected, these TEN errors in our experience appear to be the most common, Use these areas covered below as a checklist, making notes on any aspect that may resonate you’re your behaviour and of course subsequently take appropriate action as needed.

#1. Chasing Price

• Implications: Chasing price happens when traders enter impulsively after a sharp price movement in a particular direction. This is often driven by FOMO (Fear of Missing Out), and typically results in buying at overextended levels where a trend is already very established and may have almost run its logical technical course. This often results in a trade reversing or at best price exhaustion and little or no positive outcome over time. Price reversal will often, even with the appropriate risk management in place result in repeated losses. 
• Solutions: Develop a disciplined approach by waiting for either retracements to logical support levels, with of course evidence either of a bounce upwards, or even a breach of a new key level, or previous swing high (or low if “going short”). 

Either of these approaches may result in achieving a more favourable entry. Also many trading platforms, including MT4 and MT% GO Markets platforms can use notification alerts to identify when the price reaches these levels, which is a useful feature that may assist in making sure robust decision-making occurs on a consistent basis. 

Additionally pending orders may also be used as part of your effective entry toolbox, set with more “cold” logic rather than being driven by emotional excitement of price velocity that may often be short-lived.

#2. Ignoring Market Context

• Implications: Ignoring the broader market environment leads to trades that contradict prevailing trends or key market conditions. 

This oversight often results in entering trades with low probability, increasing the likelihood of stops being triggered. For long-term success, aligning trades with the dominant market forces is not only logical but appears from any research performed to be generally higher probability of at least some period of time where it is more likely that price will move in your desired direction. Failure to do so on a regular basis, can leave traders feeling like they’re always on the wrong side of the market.

• Example: A trader shorts the S&P 500 during a small pullback, not realising the index is in a strong uptrend on the daily chart. The pullback ends, and the uptrend resumes, quickly hitting the stop-loss.
• Solutions: Perform a multi-timeframe analysis before entering a trade. Use higher timeframes (e.g., daily if trading an hourly timeframe) to understand the broader trend and ensure the trade aligns with it. Incorporate trend-following tools like moving averages or trendlines to validate entries is of course a common method to help substantiate this approach.

#3. Over-Leveraging Positions

• Implications: Over-leveraging magnifies both potential profits and losses, but the latter can have devastating consequences. Even small adverse price movements can wipe out significant portions of an account, leading to margin calls (and so taking “exit control” away from the trader) or even complete account depletion. This often traps traders in a cycle of “chasing losses,” further compounding mistakes.
• Solutions: Implement strict position sizing rules. For example, risk no more than 1-2% of your account on a single trade by adjusting your position size relative to your stop-loss distance. 
• Your maximum ‘Risk per trade’ should be based on your Tolerable risk % of Account size per trade (e,g, 1%) x Entry price to Stop-loss distance.

#4. Entering Without a Stop-Loss

• Implications: Trading without a stop-loss exposes traders to uncontrolled risk. It fosters a dangerous mindset of “hoping” the market will work in their favour, often leading to mounting losses. A single large loss can undo months of profitable trading, shaking both confidence and capital and so have longer term psychological implications such as loss aversion, which can further distort good decision-making.
• Solutions: Use stop-loss orders based on logical technical levels, such as below a recent swing low. Although less pertinent to entry but equally important through the life of a trade is potential use of trailing stops can also help lock in profits as the price moves favourably, protecting against reversals and of course profit targets based on logical potential technical pause or reversal points.

#5. Over-Reliance on Indicators

• Implications: Indicators are helpful tools but are often misused when relied upon as the sole basis for trade decisions. Many indicators are lagging by nature, meaning they reflect past price movements rather than anticipating future ones. Blind reliance on indicators can lead to late or false entries, especially in trending or volatile markets. Price action and associated volume should be treated as the primary decision making points with indicators used for confluence, 
• Example: A trader buys a stock because RSI indicates oversold conditions, but the stock continues to decline as the market remains in a strong downtrend.
• Solutions: Combine indicators with price action and market context. For example, use RSI or MACD as confirmation for setups rather than primary signals. Always validate indicator signals with chart patterns, price range within a specific candle, and/or key levels of support/resistance.

#6. Trading News Events 

• Implications: News events often create sharp volatility, which can lead to slippage, widened spreads, and unexpected losses. Trading without a structured plan during (and arguably before) such events exposes traders to heightened risk, especially in fast-moving markets.
• Examples: A trader enters a position before a Federal Reserve announcement, expecting dovish remarks. Instead, hawkish comments cause a rapid market reversal, leading to a significant loss. 

It is worth noting that it doesn’t even have to be an adverse announcement to that which was expected to disappoint. If one believes , as is often cited, that everything that is known or expected is already “priced in” then even an expected number or news release can fail to provide a potentially profitable price move. 

Also of course, equally as dangerous to capital is not to be aware of significant market events at all. To enter prior to these from a place of ignorance that they are even happening  is potentially as damaging to capital..

• Solution: Use a trading calendar to track upcoming high-impact news events. If trading news is part of your strategy, place pending orders above and below key levels to capitalise on breakouts while controlling risk.

#7. Trading Impatience

• Implications: Entering trades prematurely often leads to setups that fail or require larger stop-losses to accommodate unnecessary volatility. This behaviour stems from a need to “be in the market,” and this “itchy trigger finger” which is in essence a  compromise of discipline arguably can increase the likelihood of losses.
• Example: A trader buys a stock before confirmation of a breakout, only to see the price reverse and remain in a sideways trend for a prolonged period of time not only failing to see that specific trade do well but also arguably adds opportunity risk as that money invested could be in a trade that has indeed set up to confirm a change of sentiment, 
• Solution: Establish clear entry criteria and wait for confirmation, such as a candle closing above resistance. Articulate these clearly and unambiguously within your trading plan, 

#8. Misjudging Risk-Reward Ratios

• Implications: Poor risk-reward ratios undermine profitability. Even with a high win rate, losses can quickly outweigh gains if the potential reward doesn’t justify the risk. Either a failure to have defined acceptable levels articulated within your plan or ignoring (based on previous price action) potential pause or reversal points are the two main causes.
• Example: A trader risks $500 to make $200 on a trade. Over several trades, a few losses wipe out multiple winning trades.
• Solutions: Ensure a minimum risk-reward ratio is stated for example 2:1 before entering. For instance, if risking $100, target a profit of at least $200 to maintain positive expectancy.

#9. Over-Trading

• Implications: Over-trading leads to increased transaction costs, emotional exhaustion, and reduced focus on high-quality setups. This is often driven by revenge trading or overconfidence after a winning streak.
• Example: A trader takes several trades in a single session after a loss, compounding mistakes and ending the day with a larger drawdown.
• Solutions: Set a daily trade limit and focus on quality over quantity. Use a trading journal to reflect on your trades and identify patterns of over-trading.

#10. Ignoring Correlation Between Assets

• Implications: Trading multiple correlated assets amplifies risk, as adverse moves in one asset can lead to simultaneous losses across others. Hence, even if say a 2% maximum risk is assigned to a single trade, if trades are highly correlated then that risk is multiplied potentially by the number of trades open. 
• Example: A trader goes long on EUR/JPY, AUDJPY and GBP/JPY and a sharp JPY rally causes losses in all three positions.
• Solutions: Use correlation matrices to assess relationships between instruments and diversify by trading uncorrelated assets. For instance, balance a forex position with a commodity trade.

Summary: 

Trade entry mistakes are often rooted in a combination of emotional decision-making, poor planning or preparation, and over-reliance on tools or strategies without proper context. 

By identifying these common errors and implementing structured solutions, traders can greatly enhance their ability to execute high-quality trades. 

The key to success lies in discipline, patience, and a willingness to adapt and learn from mistakes. Start reviewing your entry process today, be honest with any of the above that may resonate with you (As awareness is always the first step in improvement) and give yourself the chance to potentially transform your trading outcomes over time.