Exit Point


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.


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.

  1. Stop-Loss Order

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  2. Limit Order

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  3. Entry Point

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  4. Stop Order

    An order to buy or sell a security when its price surpasses a ...
  5. Exit Strategy

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  6. Hard Stop

    A price level that, if reached, will trigger an order to sell ...
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