Entry and Exit Strategies

A strategy is useless without precise rules for entering and exiting trades. "I felt like it" is not a strategy.

Entry Types

There are two main ways to enter a trade:

1. The Breakout (Momentum)

Buying as price moves through a level.

• Pros: confirm trend strength immediately.
• Cons: prone to "false breakouts" where price reverses.
• Best for: Aggressive traders, high momentum news plays.

2. The Pullback (Value)

Buying as price moves down to a level in an uptrend.

• Pros: better risk-reward ratio, buying "cheap".
• Cons: fear of "catching a falling knife".
• Best for: Conservative traders, swing trading.

Exit Strategies

Exiting is harder than entering because greed and fear take over.

1. Fixed Targets (Take Profit)

Selling at a pre-determined price (e.g., next resistance level).

• Good: locks in profits.
• Bad: caps potential gains if trend continues.

2. Trailing Stops

Moving your stop loss up as price moves in your favor.

• Good: lets winners run.
• Bad: can get stopped out by normal volatility before the big move.

Combining Them: The "Scale Out"

Why choose one?

• Sell 50% at your fixed target to bank profit.
• Hold 50% with a trailing stop to catch the trend.

The Entry Checklist

Before clicking buy, ask:

1. Is the trend in my favor?
2. Is there a valid signal (breakout/pullback)?
3. Where is my stop loss?
4. Is the Risk:Reward at least 1:2?
5. Is there a major news event coming up?