Entry Criteria in a Trading Plan

Entry criteria are the specific conditions — defined in advance, before any particular trade opportunity arises — that a trader requires to be met before opening a position. These criteria are intended to remove ambiguity and impulse from the decision of when to enter a trade.

Deciding entry criteria in advance, rather than in the moment, is intended to reduce the influence of emotion or impulse on trading decisions. When a specific opportunity arises, having pre-defined criteria allows a trader to assess it objectively against a standard set in a calmer, more considered state, rather than making a decision under the pressure of a live market moment.

Entry criteria can draw on many of the concepts covered elsewhere in this Learning Hub, such as specific chart patterns or indicator conditions (covered in the Technical Analysis module), fundamental factors (covered in this module's Fundamental Analysis unit), or a combination of both. The specific content of entry criteria varies significantly between individual traders and approaches, and this lesson does not endorse any particular set of criteria.