Master trade timing with proven entry and exit techniques. Learn breakout entries, pullback strategies, optimal exits, and risk/reward optimization.
Your entry determines your initial risk and profit potential. Here are the 5 most effective entry types:
Enter when price breaks above resistance (bullish) or below support (bearish). Best in trending markets with high momentum.
Entry Criteria:
Example
Stock breaks above $50 resistance with 2x normal volume. Enter at $50.10, stop loss at $48.50 (below breakout), target $54 (1:2.6 R:R).
Buy dips in uptrends or sell rallies in downtrends. Lower risk than breakouts, better entry prices.
Entry Criteria:
Example
EUR/USD in uptrend, pulls back to EMA(20). RSI hits 35, then reverses up. Enter at 1.1050, stop below low at 1.1020, target 1.1140 (1:3 R:R).
Catch trend changes early. Higher risk but potentially larger gains. Requires strong confirmation.
Entry Criteria:
Example
BTC downtrending. RSI divergence forms, MACD crosses up, price breaks trendline at $42K. Enter $42.2K, stop $40.5K, target $46K (1:2.2 R:R).
Use indicator crossovers or thresholds. Clear, objective signals but can lag price action.
Popular Indicator Entries:
Example
Gold: EMA(20) crosses above EMA(50) at $1,950. Enter $1,952, stop below crossover at $1,935, target $2,000 (1:2.8 R:R).
Enter on chart pattern completion. Combines technical analysis with clear entry points.
Common Pattern Entries:
Example
SPY forms bull flag. Breakout at $450. Enter $450.50, stop below flag at $445, target $460 (1:2.1 R:R).
Exits are more important than entries. Bad exits destroy good trades. Here are the 5 essential exit types:
Set stop loss at fixed percentage or price level below entry. Simple, clear risk definition.
Types:
When to Use:
Set profit target at predetermined level. Secures gains, prevents holding too long.
Methods:
Pro Tip:
Use partial exits: Take 50% profit at 1:2 R:R, move stop to breakeven, let remaining 50% run to 1:4. This combines security with profit maximization.
Stop loss that moves with price, locking in profits while allowing upside. Essential for trend following.
Trailing Methods:
Example
Enter long at $100. Initially stop at $95. Price rises to $110, trailing stop moves to $104.50 (5% trail). Price hits $120, stop at $114. Protected $14 gain while allowing upside.
Exit when indicators signal momentum shift or overbought/oversold conditions.
Common Indicator Exits:
Exit after predetermined time period, regardless of profit/loss. Prevents overholding.
Use Cases:
Why Use
Trades that don't move after entry often fail. Time exits force discipline, prevent hope-trading, and free capital for better opportunities.
Risk/reward ratio determines long-term profitability. Here's how different ratios affect required win rate:
| Risk/Reward | Win Rate Needed | Example | Best For |
|---|---|---|---|
| 1:1 | 50%+ | Risk $100, make $100 | Scalping, high win rate systems |
| 1:2 | 40% | Risk $100, make $200 | Balanced approach, most strategies |
| 1:3 | 33% | Risk $100, make $300 | Trend following, swing trading |
| 1:4 | 28% | Risk $100, make $400 | Strong trends, position trading |
| 1:5 | 22% | Risk $100, make $500 | Long-term trends, home runs |
Entry Strategy:
Exit Strategy:
Real Example
AAPL in strong uptrend. Pulls back to EMA(20) at $175. RSI at 45. Entry: $175.50. Stop: $171 (2.5% below). Target: $189 (1:3 R:R). Actual result: Reached $189 in 8 days, trailing stop closed at $192 for 9.4% gain.
Entry Strategy:
Exit Strategy:
Real Example
SPY oversold at $445, touches lower BB. RSI 28. Entry: $445.50. Stop: $432. Target 1: $450 (middle BB). Target 2: $455 (upper BB). Result: Hit target 1 in 2 days (+1%), target 2 in 4 days (+2.1%).
Entry Strategy:
Exit Strategy:
Real Example
TSLA consolidates $200-$220 for 3 weeks. Breaks $220 with 3x volume. Entry: $221. Stop: $218. Target: $240 (range height $20). Result: Hit $240 in 6 days, trailed to $245 exit for 10.9% gain.
Entering without knowing exactly where you'll exit is gambling. Always set both stop loss and take profit BEFORE entering. Emotional exits destroy accounts.
Never move stop loss further from entry to "give the trade more room." This turns small losses into catastrophic ones. Only move stops closer (trailing) or to breakeven.
Entering after big move already happened leads to poor risk/reward. Wait for pullbacks or next setup. FOMO entries rarely work.
Taking 1% profit when you risked 2% creates negative expectancy. Let winners run to at least your initial target. Use trailing stops for trends.
Entry strategies are systematic rules that determine when to open a trade. Common types include breakout entries (entering when price breaks key levels), pullback entries (buying dips in uptrends), reversal entries (catching trend changes), and indicator-based entries (using RSI, MACD, moving averages). Good entry strategies have clear, objective criteria that can be backtested.
The best entry strategy depends on market conditions and your trading style. Breakout entries work in volatile, trending markets. Pullback entries work in strong trends. Mean reversion entries work in ranging markets. Most successful traders combine multiple confirmation signals: price action + indicator + volume for higher probability entries.
Exit when either your stop loss hits (limiting losses), take profit hits (securing gains), or exit conditions trigger (indicator signal, time-based, or opposite entry signal). Never exit based on emotion. Professional traders set both stop loss and take profit before entering, ensuring a minimum 1:2 risk/reward ratio.
A good risk/reward ratio is at least 1:2 (risk $100 to make $200). Professional traders use 1:2 to 1:4 ratios. With a 1:2 ratio, you only need 40% win rate to be profitable. Higher ratios (1:3, 1:4) allow lower win rates but require larger price movements. Balance risk/reward with your strategy's typical win rate.
Use fixed stop loss for defined-risk trades with clear targets. Use trailing stops for trend-following strategies to lock in profits as price moves favorably. Many traders combine both: start with fixed stop loss, then switch to trailing stop once trade is profitable. ATR-based trailing stops adapt to market volatility.
Wait for candle close above/below level (not just intraday touch). Require volume confirmation (2x+ average). Add filter like RSI > 50 for bullish breakouts. Consider entering on first pullback after breakout rather than breakout itself. Use smaller position size on aggressive breakout entries.