Entering or exiting into the new trade position at the right time and at the right level is one of the very important aspects of making your strategy profitable. If you enter at the right level you will not only avoid the stop losses but also have a better chance to get the returns when the stock or market index moves as per your expectations.
When creating the long position, entering at the lowest levels has a better possibility of giving returns. While on the upper side booking the profit at the highest point is the right trading strategy. However, finding the right entry and exit point is not possible for everyone, especially if you don’t have an idea about trading and technical analysis. So, the question arises here how to find or determine the entry and exit points in the stocks.
How to Determine or Find Entry and Exit Points in Stocks?
To determine the entry point you need to analyse the price trend on the chart and also use various tools and techniques that will show the best levels. There are various points you can choose to enter or exit into a trade position. Here are a few points you need to determine while finding the entry and exit points in stocks or the main index.
Breakouts & Breakdowns
Breakouts occur at the resistance levels, where most of the time stock price or market index stops or turnaround from a bullish to a bearish trend. However, when bulls are dominating such resistance breaks and when the stock price comes out from this trajectory it is called the breakout point where you can decide to enter into a trade position. Similarly, at the lower side, there are support levels where a falling stock price or market index stops further moving. However, when bears are dominating this support level breakdown creates a selling opportunity for the traders. Here either you can exit from your selling trade position or book the profit that you are gaining from short-selling.
Support & Resistances
This is like the support levels where the stock price of the market index pulls back in an upward direction. The market never moves in a straight line direction, there is zigzag movement, and whenever the price comes at the support levels giving the opportunity to enter into a new trade position. Similarly, there are resistance levels from where the stock price turns back where you can enter into a short position or book the profit of a long position. Make sure the price does not break this resistance level otherwise, there will be a bullish trend and you should create a long trade position from here and wait till the uptrend continues.
Use the Open Interest Data
If you are looking for entry and exit positions in the future and options market, then you can use the open interest data for trading decisions. The coordination of change in open interest with change in price shows a bullish and bearish trend in the stock or market index.
You can analyse the open interest data to decide whether to enter or exit from the individual stocks or market index. An increase in the open interest with an increase in price shows there is the possibility to move the stock in an upward direction, hence you can enter with a long trade position and similarly, there are other signals with change in open interest.
Low and High Swings
Swing trading can also be used to decide the entry and exit positions in the stock market. In TradingView when the market trades in a range there are high and low points providing the swing trading opportunity for the traders. You can use these swing points for deciding the stop-loss while entering into the new trade position.
However, swings can also be used for making trading decisions but it is possible when you analyse the swings with the right chart patterns. You can also use the various technical indicators that help to know the right levels of buying or selling where you can enter into the trade positions. These indicators will also help you to know the entry and exit points with a better level of accuracy.
The Price & Chart Patterns
A technical analyst with experience of reading price action knows how important these candlesticks are in predicting price, direction, and trend reversals. When the price action is complemented by candlestick chart patterns, it completes the picture over a bigger time frame and also acts as an indicator of entering or exiting trade in the stock market. There are different types of candlestick chart patterns to identify the trend, entry and exit in stock and market indices.
