Absolutely all experienced traders agree that before opening a trade in any financial market, one should wait for the most favorable circumstances for this.
It is the coincidence of all the most favorable factors indicating the onset of such circumstances that is often referred to as the entry point into the market or a trading signal.
But entering a trade correctly is only half the success. For a trade to be truly profitable, one must determine not only the entry point but also the timely exit point from the trade.
After all, if the trade is held too long, the result may be at least a loss of profit or even a loss.
Defining factors of the entry point
Price levels
The foundation of technical analysis of the market. The main task of price levels is to determine where the price is: at the top or at the bottom of the market.
Thanks to the levels, the trader can easily determine whether the asset is expensive or cheap at that moment.
Trend
The main direction of price movement. This element of technical analysis gives us an understanding of who dominates the market: buyers or sellers.
Thanks to the determination of the trend direction, the trader knows exactly in which direction they should look for a trade.
It is precisely the intersection of the asset price at the point where the key level coincides with the trend line that usually provides an understanding that favorable conditions for opening a trade have arisen in the market.
And if the trend is downward, preference is given to entry points that appear after the price has demonstrated an upward correction to the resistance level at the top of the market.
Meanwhile, during the development of a downward trend, traders consider the possibility of opening buy trades after a downward correction of the price to the support level at the bottom of the market.
But, in addition to price levels and trends, the overwhelming majority of traders actively use auxiliary tools such as mathematical indicators, candlestick patterns, and figures of technical analysis.
With their help, they receive confirming signals indicating the onset of favorable circumstances for opening a trade due to a rebound or breakthrough of a price level or trend line.
Defining factors of the exit point
Strangely enough, but to determine the exit point from a trade, experienced traders use the same tools that they use to determine the entry point, just in reverse.
So, if during the development of a downward trend after a rebound from the resistance level at the top of the market, a trader entered a sell trade, they will close this trade at the moment when the price reaches the lower boundary of the market, which is defined by the nearest key support level.
Just as during the opening of a trade, when closing it, traders still actively use the entire spectrum of auxiliary tools consisting of mathematical indicators, candlestick patterns, and figures of technical analysis.
Entry and exit points should be determined even before opening the trade.
Understanding where the potential entry and exit points are makes navigating the market a relatively straightforward process. Knowing where it is best to enter the market, the trader can set a pending order at that point, allowing them not to miss the entry point.
While understanding where the price might be during the development of the scenario they envision gives the trader the opportunity to automatically lock in profits using a take-profit order.
Thus, by calculating the trade in advance before it is executed, experienced traders almost never miss the onset of favorable circumstances in the market, achieving maximum results during trading.