Entry
The price at which you open a position.
Also called: entry price · open a position
Written by Javier Sánchez Ros
In plain language
Your entry is the reference point for everything else in the trade. Risk is measured from it, reward is measured from it, and your position size is derived from the distance between it and your stop.
The entry you plan and the entry you get are different things. A market order fills at the ask or bid; a limit order fills at your price or not at all.
A good entry is not the lowest price of the move. It is a price where your invalidation level is close enough that the trade can be sized properly.
Worked through
The same idea, entered at the level and entered after it breaks
- Entry at the level
- $22.10, stop $21.70
- Risk per share
- $0.40
- Entry after confirmation
- $22.80, stop $21.70
- Risk per share
- $1.10
Same thesis, same invalidation point, same target. The only difference is where the trade was entered, and it changes the risk per share by a factor of nearly three — which changes the position size by the same factor, and the risk/reward with it.
That is the real cost of waiting for confirmation, and it is usually paid without being noticed. Confirmation is not free: it buys a higher probability of being right in exchange for a worse ratio when you are. Whether that is a good trade depends on the numbers, not on how much safer it feels.
The opposite error is just as expensive. Entering early, before the level has done anything, means a tight stop attached to an idea that was never actually triggered, and a string of small losses on trades that had no signal behind them.
The useful discipline is to define the entry and the invalidation together, before either exists. An entry chosen without knowing where the stop goes is not an entry, it is a purchase.
Why it matters
Entry quality controls stop distance, and stop distance controls position size. A tighter, better-defined entry lets you take the same dollar risk with a larger, more responsive position.
Common mistakes
- Chasing an entry after price has already run, which widens the stop and shrinks the position.
- Using the chart’s last price as the entry when the spread is wide.
- Entering before defining where the idea would be proven wrong.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
The price at which you close a position, whether at a profit or a loss.
A predefined exit that closes a losing trade before the loss becomes serious.
A predefined price where a winning trade is closed automatically.
The amount of an asset you buy or sell in a single trade.
An order to buy or sell at a specified price or better — it may not fill at all.