Setup Price

DEFINITION of 'Setup Price'

A price level predetermined as the point of entry into a specific security, stock, or currency. Once the setup price is broken the trader will enter the position determined by the setup. This could include shorting a stock because they think the price will drop or going long because they expect an upward movement.

BREAKING DOWN 'Setup Price'

The setup price can be determined based on technical or fundamental factors as well as personal opinion on the part of the trader. Usually reaching the setup price is not enough to make a move. Generally traders wait for a significant break to confirm the trend will continue.

For example, if you're looking for the price of a stock to go above $25 before buying, the setup price is $25. It might be better for the price to exceed $25.05 instead of purchasing as soon as $25 is reached. Timing will depend on volume, volatility and many other factors affecting price movements.

RELATED TERMS
  1. Technical Rally

    An upward movement in a security's price following a declining ...
  2. Selling Into Strength

    A proactive trading strategy carried out by selling out of a ...
  3. Bottom

    The lowest point or price reached by a financial security, commodity, ...
  4. Buy Weakness

    A proactive trading strategy in which a trader takes profits ...
  5. Opening Range

    The highest and lowest prices of a security during the first ...
  6. Trade Price Response

    The setting up of a trade which is based upon what the price ...
Related Articles
  1. Markets

    Day Trading Strategies

    Day trading is the term often used for buying and selling stocks within the same day. Day traders seek to make a profit by leveraging large amounts of capital in order to take advantage of small ...
  2. Trading

    Stop Hunting With The Big Forex Players

    Learn to bank short-term profits by placing stops away from the crowd.
  3. Trading

    Profit Without Predicting The Market

    Traders who try to predict the future can actually harm their trading options.
  4. Managing Wealth

    Use Price Action Trading Strategy for Results

    Bored by the fixed rules of technical and fundamental analysis? Price action trading allows you to customize your own trading strategy.
  5. Trading

    Using Double Tops And Double Bottoms In Currency Trading

    Find out how to apply the two most common price reversal patterns to your trading.
  6. Trading

    An Introduction To Price Action Trading Strategies

    For traders who want a mix of technical analysis with their own control in decisions, price action trading offers the perfect fit. Here's how it works.
  7. Financial Advisor

    A Day In The Life Of A Day Trader

    Day trading has many advantages and, while we often hear about these perks, it's important to realize that day trading is hard work.
  8. Markets

    Uptrend and Downtrend Trade Setups (ERIC, KIM, XYL)

    Here are current trade setups for buying or selling, and a couple stocks that could see a big move either way.
  9. Trading

    What Type Of Trader Are You?

    There are different ways stock traders attempt to profit from market movements. Which of the strategies do you use?
  10. Trading

    What The Market Open Tells You

    The first few moments of trading provide a lot of information. If a trader analyzes this information, it can give a lot of insight into the market's moves for the day.
RELATED FAQS
  1. How do traders identify confirmation of prices on a chart?

    Learn about some of the crucial tools that traders can use to confirm their price movements on a chart before entering or ... Read Answer >>
  2. What types of data are necessary to make a technical analysis?

    Understand what technical analysis is, the basic theory behind employing it and what data inputs are needed to conduct it. Read Answer >>
  3. With what kinds of securities does it make the most sense to enter a long position?

    Find out which securities provide the best opportunities for entering long positions, including how this strategy is used ... Read Answer >>
  4. Why is the Ease Of Movement Indicator important for traders and analysts?

    Read more about the ease of movement indicator, a technical momentum oscillator created by Richard Arms to track price changes ... Read Answer >>
  5. How do traders and technical analysts interpret the Average True Ranges (ATR)?

    Learn about average true range, a volatility indicator used by technical analysts to pinpoint changing trends and bullish ... Read Answer >>
  6. What is the difference between investing and trading?

    Investing and trading are two very different methods of attempting to profit in the financial markets. The goal of investing ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center