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. Patience Is A Trader's Virtue
    Trading Strategies

    Patience Is A Trader's Virtue

  2. A Look At Exit Strategies
    Active Trading Fundamentals

    A Look At Exit Strategies

  3. An Introduction To Oscillators
    Active Trading

    An Introduction To Oscillators

  4. Day Trading Strategy Steps
    Trading Strategies

    Day Trading Strategy Steps

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center