InvestorQ : Are there any ground rules on how I should gain entry into a stock?
Priyanka Singh made post

Are there any ground rules on how I should gain entry into a stock?

varsha Motwani answered.
3 years ago

Your trade begins with your entry. Of course, you are supposed to do your due diligence before entering into a position. Look at the financials and the non-financials before getting into a proper trade. That is the core of it. This is the first leg of trading. At what price do you enter the stock and how do you structure your order to enter the stock. For example, if the market is trending then you can use a market order but if the market is volatile it always makes sense to use limit orders. Check if the stock is in a downtrend or uptrend. Also you need to take a call on whether you should be buying in lump sum or you should be buying in a phased manner.

As a trader never try to outguess or outsmart the market but rather focus more on understanding the underlying trend and playing accordingly. A good entry is also about putting the stop loss at the right place. When it comes to stop losses, the level of stop loss is fixed based on your affordability and the technical levels of the stock. The stop loss is normally set slightly below the support level for a buy trade and slightly above the resistance level for a sell trade. A good deal of the success of your trade does owe to the manner and level at which you enter the stock. The more foolproof your entry strategy, the more likely you are likely to get a good risk-return trade-off and higher the probability that you will be profitable.