Trading Entry & Exit Points, How to Find Stock Entry & Exits

Monday, October 26, 2009

Trading Entry and Exit Points

Market timing is all about finding the right points to enter a trade at the start of a trend, namely, entry points; and the right points to exit the trade at the end of the trend with maximum profit, namely, exit points. Entry and exit points are important in all forms of trading, but are most important in short-term trading, when traders want to capitalize on a relatively small price movement.

The entry and exit points should match traders' trading style, market/security volatility, anticipated price movement, trading goals, margin, position size, etc.
The trader should be clear about the nature of the trend that he can capitalize with his setup - his trading skill, risk tolerance, money flow, trading system, etc.
There are a variety of tools available for finding entry points; traders can use indicators, chart patterns, candlestick patterns and fundamentals to find an opportunity.
Traders should use more than one tool to confirm the opportunity. It is good to use the tool(s) one is most comfortable with to find the entry points and use others to confirm it. It is also better to use different kinds of tools, rather than the same one.
Perhaps finding exit points is more difficult than finding entry points. There are some indicators which predict reversals, support and resistance levels; and trend strengths can be good tools for finding them.