The price level at which a trader or investor initiates a position in a financial asset. It’s a critical aspect of trading strategy, as a well-timed entry can significantly improve profit potential and reduce risk. Entry points can be determined using technical indicators, support/resistance zones, candlestick patterns, or fundamental analysis. In fast-moving markets, traders may set limit orders to control execution prices. A poor entry point can expose the position to unnecessary drawdowns, while a well-timed one increases the probability of success. Entry points should always align with the overall trading plan and risk tolerance.
Example:
A trader waits for a stock to retest a support level before initiating a long position.