Entry Rules: When to Pull the Trigger

Never enter on anticipation; always enter on confirmation. Confirmation means the market has shown its hand before you risk capital.

The Three Entry Types

Every swing trade entry falls into one of three categories. Each has a different risk profile:

1. Breakout — Price moves above resistance with volume confirmation. Best for catching new trends early. Clear invalidation (if price drops back below resistance, you're wrong). The risk: false breakouts are common, so volume confirmation is essential.

2. Pullback — Buy a temporary dip in an uptrending stock at support (moving average, trendline, or prior breakout level). Lower risk and better entry price than breakouts. The risk: the pullback might be the start of a reversal.

3. Reversal — Bet on a trend change after a chart pattern completes (double bottom, head and shoulders). Highest reward potential because you catch a new trend from the start. The risk: lowest win rate of the three, because most "reversals" fail.

Breakout Confirmation Checklist

Stop: Below the breakout level or consolidation pattern low.

Pullback Confirmation Checklist

Stop: Below the pullback swing low.

Reversal Confirmation Checklist

Stop: Below the pattern low.

Conservative vs Aggressive Timing

If you have a day job, conservative entries at the open are practical. If you can check near the close, aggressive entries have a statistical edge in many strategies, especially mean-reversion.

Multi-Timeframe Confirmation

When all three timeframes align, probability of success increases. When they conflict, trade quality drops.

Entry Filters

Filters prevent low-probability trades even when your primary setup triggers.