Entry and Exit Criteria — Developing a Trading Process

Setup vs. trigger

A 'setup' is the broader condition that puts a market on your watchlist — for example, price being above a moving average, or a currency pair approaching a known support zone. A 'trigger' is the precise event that tells you to actually enter now, such as a candle closing back above that support level.

Confusing the two leads traders to enter too early (as soon as the setup appears) or to hesitate indefinitely waiting for perfect confirmation that never fully arrives.

[Read the lesson: Entry and Exit Criteria](/learn-to-trade/developing-a-trading-process/entry-and-exit-criteria)

Exits are decided before you enter

A complete entry plan always comes with its exits already defined: where the stop-loss goes if the trade is wrong, and where the target or trailing method is if the trade is right.

Deciding exits after entering invites emotional interference — a trader in a losing position is tempted to move the stop further away 'to give it room,' and a trader in a winning position is tempted to exit too early out of fear of giving profits back.

[Read the lesson: Entry and Exit Criteria](/learn-to-trade/developing-a-trading-process/entry-and-exit-criteria)

Placing stops with structure, not feelings

Effective stop-loss placement is usually anchored to market structure — beyond a recent swing high/low, or outside a support/resistance zone — rather than to an arbitrary dollar amount the trader is 'willing to lose.'

A stop placed purely on a comfort level of risk, ignoring where the trade idea would actually be proven wrong, tends to get hit by normal volatility even when the underlying idea was sound.

**Structure-based stop:** If a trader buys GBP/USD expecting a bounce off support at 1.2500, a stop just below 1.2470 (beyond the recent swing low) reflects where the support idea is actually invalidated. A stop at 1.2490 based only on 'I don't want to lose more than 10 pips' ignores the market's structure and may be stopped out by normal noise.

[Read the lesson: Entry and Exit Criteria](/learn-to-trade/developing-a-trading-process/entry-and-exit-criteria)

Multiple exit methods

Traders commonly use a fixed target based on a reward-to-risk ratio, a trailing stop that locks in gains as price moves favorably, or a partial exit approach that closes part of the position at a first target and lets the rest run.

Whichever method is chosen, it should be written into the plan in advance and applied consistently, so it can be evaluated and refined using real data rather than guesswork.

[Read the lesson: Entry and Exit Criteria](/learn-to-trade/developing-a-trading-process/entry-and-exit-criteria)