Price Action Trading: Entry & Exit Strategy

March 27, 2024 Price action

Price action trading is a strategy used in stock market trading that relies on the observation of price movement over time. When buying or selling stocks, you can use price action to identify potential entry and exit points.

Price Action indicator Entry & Exit

There are a few key strategies to follow when entering and exiting positions in price action trading:

Use Fibonacci retracements as your entry points. This is a common strategy used by many traders, and involves using Fibonacci retracements to enter and exit trades. By using Fibonacci retracements, you can ensure that you are getting into and out of a trade at the right point in order to maximize your chances of success.
Use trend lines as your guideposts when trading stocks or commodities. When following trends, it is important to stay within the boundaries of the trend line so that you don’t get too far out of bounds and end up losing money on your trade. This will help you avoid getting caught up in the momentum of the market and ending up with a bad trade outcome.
Be patient when trading price action trades. It is important not to get too excited about a particular stock or commodity, or sell into excessive moves in order to make a quick profit. A good rule of thumb is to wait for confirmation from the chart before taking any action, so that you don’t end up making an incorrect decision based on emotion rather than facts.

Exit Strategies Price Action

Price action can be used to enter or exit a trade. Entry points are typically identified when prices move higher than the previous transaction level. Exit points are typically identified when prices move lower than the previous transaction level.

Traders will often try to hold onto their position until the pattern has ended, at which point they may either sell or wait for another opportunity to enter the market.

Powerful Price Action Exit Strategies to Protect Your Trading Profits

One strategy is to use a trailing stop. This is simply setting a stop loss below the latest swing high or low. If the price falls below your stop loss, you will automatically sell and avoid any losses.

Another strategy is to use a take profit level. This is effectively a limit order that sets a specified price at which you want to sell your shares.

Stop Loss Order:

When you’re trading price action, it’s important to have a stop loss order in place. This is a predetermined amount of money that you will lose if the price of the security goes below this point.

Entry & Exit Strategy

If the stock rises above $530, your order will not be placed and you’ll keep the profits from your sale. Having a stop loss in place protects you from losing money should the market move against you.