Entries and Exits

Where the whole thing is supposed to pay off.

An entry with a stop below the level and a target at the next one stop entry target An entry is not a feeling that something is going up. It is a price at which your idea becomes valid, paired with a price at which it becomes wrong, and a price at which it has paid. Entry A specific trigger. A close above a level, a hold at a moving average, a confirmed break. Stop The price at which the idea is proven wrong. Placed where the structure fails, not where the loss becomes uncomfortable. Target The next level where the market has historically reacted. Not a number you would like. Risk to reward The distance to the target divided by the distance to the stop. Below about 2 to 1, the odds have to be very good indeed. The stop is the part beginners skip, and it is the only part that is not optional. An entry without a stop is not a trade, it is a hope with money attached.

Part of Learn NEPSE Investing, a free course on reading Nepali company accounts and charts. Section: Charts.