DEFINITION of 'Entry Point'

The price at which an investor buys an investment. The entry point is usually a component of a predetermined trading strategy for minimizing investment risk and removing the emotion from trading decisions. Recognizing a good entry point is the first step in achieving a successful trade.

BREAKING DOWN 'Entry Point'

For example, an investor researches and identifies an attractive stock, but feels that it is overpriced. He decides that when the price decreases to a certain level, he will buy. This is his entry point. Exercising patience and waiting for the right time to buy will help him earn better returns on his investments. Determining both an entry point and exit point in advance are important strategies for investors who want to maximize their returns.

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