What does entry, target, and stop-loss mean?

The entry point is best described as the price at which the investor buys or sells a financial instrument. The choice of the best trade entry point must be influenced by a thorough analysis of the current value of the security, as well as prospects for growth or decline. For instance, if your analysis indicates that the security is underpriced, that makes it the perfect entry point but if overpriced with bleak potential for future growth, you might want to be patient and wait for it to rebalance. Put simply; the entry is the price level at which you buy into a financial instrument.

Ideally, the entry point is every investor’s first point of contact with the market as it enables you to have access to your preferred financial instrument. The price at which this security is transacted at is the entry point.

The target price refers to the price level that an investor hopes a security item will reach after a specified period of time. The calculation of the best target price involves a deeper analysis of the instrument’s historical costs as well as possible price influencers expected to act on the price in the future. As an investor, you can maximize your rate of return by buying a financial instrument when it is trading below the entry price and selling them as soon as they hit or surpass this target profit.

A stop loss is a market order directing your exchange to sell or buy a security if its price trends below or above a certain price level. A stop-loss order is designed to minimize the investor's loss. For instance, when entering into a trade, you can direct your broker to sell the position if the price moves 15% below your entry price. Doing so ensures that you can only lose 15% of your investments.