Exit Point

AAA

DEFINITION of 'Exit Point'

The price at which an investor sells an investment. The exit point is usually decided as part of a premeditated trading strategy meant to mitigate investment risk and take the emotion out of trade decisions. Exit strategies are used by virtually all finance professionals and are a key component to successful trades.

INVESTOPEDIA EXPLAINS 'Exit Point'

For example, an investor decides to buy 100 shares of XYZ stock at $33. Before purchasing the shares, he decides that he will sell if the price drops to $30 a share. This way, he knows in advance that his maximum loss, or his risk, will be limited to $300, or a 9% loss. The investor would also choose an exit point for an increase in the stock's price, say, $40. Deciding in advance can help save an investor from holding on too long in either direction. On the other hand, many investors consider it a bad practice to sell if a company's fundamental situation hasn't weakened.



RELATED TERMS
  1. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches ...
  2. Limit Order

    An order placed with a brokerage to buy or sell a set number ...
  3. Entry Point

    The price at which an investor buys an investment. The entry ...
  4. Exit Strategy

    1. The method by which a venture capitalist or business owner ...
  5. Stop Order

    An order to buy or sell a security when its price surpasses a ...
  6. Hard Stop

    A price level that, if reached, will trigger an order to sell ...
Related Articles
  1. Trading Strategies

    Patience Is A Trader's Virtue

    Waiting may be the biggest key to reeling in that trophy investment.
  2. Active Trading Fundamentals

    A Look At Exit Strategies

    Setting appropriate exit points should help you avoid taking premature profits or running losses.
  3. Active Trading

    An Introduction To Oscillators

    Find out how this indicator may help improve the average investor's entry and exit points.
  4. Trading Strategies

    Risk Management Techniques For Shorting Call Options

    Shorting covered calls is a popular options trade strategy. Here are the methods to mitigate the risk/loss and enhance profits for selling covered calls
  5. Professionals

    Why Investors Need to Rebalance Their Portfolios

    The best way to explain why one should rebalance their portfolio is to show what could go wrong if one doesn't.
  6. Trading Strategies

    5 Ways To Adapt To Tough Markets

    Tough markets undermine profitability and lower self-confidence. Fight back with five simple but powerful rules of engagement.
  7. Chart Advisor

    Use This ETF To Trade The Swiss Franc

    Traders were stunned last week when the Swiss National Bank removed the currency peg that tied the value of the Swiss franc to the euro.
  8. Trading Strategies

    Day's First Trade Can Serve As Support/Resistance

    The first trade of the day in liquid markets defines a narrow price level that can act as support or resistance for the entire session.
  9. Chart Advisor

    3 Energy Related Stocks Poised For A Pop

    A sharp decline in energy prices have created an interested opportunity in several oil-and-gas related companies. Given the strong downtrends apparent on the charts, most traders would use recent ...
  10. Chart Advisor

    Do Good Buys Remain Among Beaten-Down Financials?

    The financial sector performed the worst last month (besides energy, of course). Here's a look at some financial stocks that have bucked that trend.

You May Also Like

Hot Definitions
  1. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center