How to identify entry points and exit points in the stock market?

Success in the stock market can be dependent on when you enter the market and when you exit the market. These decisions are essential for a profitable trade. There are a few methods for stock market entry and exit points. The investors should have the ability to identify the entry and exit points and the technical indicators to make their key decisions. These decisions rely on the trend lines, and time frame breakouts. 

Let us first understand what entry points and exit points are.

Entry points

The point at which an investment can be made is an investing point also called the entry point. An entry point will be chosen by the investor and the investor will make the investment. This decision-making is a strategy that is associated with research and analysis. 

After a brief time in the stock market, the stocks will reach at different points and these will be going through several ups and downs. An investor can optimize many entry points and designate for trading on algorithmic trade, making trade automatic with different conditions being satisfied. 

Exit points

Assets are sold at a price with the intention of making profits. The price difference between when the shares are purchased and the price at which they are sold in the market is the difference in earnings or loss on the sale. The price at which the shares are sold in the market is the exit point. The investor will close the asset at a position where it is profitable for them. 

What are the best entry and exit points indicators?

Every investor is interested in knowing the best entry points and exit points. Finding out these points is not feasible and technical indicators provide assistance in making the choice of purchasing shares. These entry points and exit points are chosen based on the arithmetic estimation. There are many indicators in the market and let us examine a few entry points and exit point indicators. 

Below are some of the entry and exit indicators for trading in the stock market. 

  1. Moving averages
  2. Stochastic Oscillator
  3. Bollinger Bands
  4. MACD
  5. The relative strength index

1. Moving averages

This is one of the slowest technical indicators. The investors use this to find out the trend indicating direction. The economic security data factors are added up and here the avg is ascertained by dividing the amt by the total data point value over a given period of time. 

The investors make the analysis by assessing the asset price change. The analyst will use the moving average technique to find out the support and resistance where the stocks can get security. This indicator will display historical price moments where the investors can make an estimation of the price moments. 

2. Stochastic Oscillator

It is also called a stochastic indicator and it is considered as one of the most popular tools for foretelling trend reversals. It provides emphasis on the price boost and also it is used for overvalued or oversold tiers in different factors such as index values, exchange rates, shares, and others. 

This method measures the momentum of price changes and the frequency of velocity changes. These price movements are called accelerations and this indicator is a price momentum that will frequently change before price movements change direction. Trend reversals can be estimated with this method. 

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3. Bollinger Bands

The ups and downs of the price in relation to stock trades are determined by the Bollinger Bands. This is a volatility indicator and the variance will alter with volatility. The changes will increase or decrease and this method is used for measuring the changes. 

When there is a rise in the price the band will get wide and when the price will fall they become narrow. Bollinger bands are used for trading on various instruments because of their flexibility. 


This indicator is created by the moving averages technique. The moving averages are used and they are converted into oscillators. This indicator is a device for finding out moving averages that have triggered a new trend whether it is a bullish market or a bearish market. Finding a trend is important because that is the point where the highest profit is ascertained. 

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5. Relative Strength Index

This is one of the most important and popular oscillators in the market. This is used for identifying oversold and over-purchased trade levels. This is a technical indicator that is used for studying financial markets in the relative strength index. 

It is predicted on having to close price levels during the trading period, it provides a chart of past strengths/weaknesses of the market. This method is not related to the indicator and should not be used as an indicator. 

Take away

It is not easy to identify the entry and exit points. It is difficult to find out for the investor where and at which point to enter and exit the market. Using the tools can help an investor to make an entry and exit into the market. It all takes experience, practice and determination to have an access to the market and make good returns efficiently, 

Meet the author
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Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It’s a commercial mortgage banking company. He has a “Doctoral Degree in Commerce” and two master’s degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.







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