Getting the entry right is crucial for swing trading success. A good entry gives you a favorable risk-to-reward ratio and puts you in profit quickly. A bad entry can turn a winning idea into a losing trade. In this guide, we cover five proven entry techniques that professional swing traders use.
Why Entry Timing Matters
Your entry price determines your stop loss distance and your potential profit. Enter too early, and you might get stopped out before the trade works. Enter too late, and you reduce your profit potential. The goal is to find the sweet spot where risk is low and reward is high.
Key insight: The best entries happen when risk is defined by a clear technical level nearby. You want to enter close to a level where you know you are wrong if price breaks through it.
1. Pullback Entry
Pullback entries are the bread and butter of swing trading. Instead of chasing a stock that has already run up, you wait for it to pull back to a support level before buying.
How It Works
- Identify a stock in a clear uptrend (making higher highs and higher lows)
- Wait for price to pull back toward a support level (moving average, trend line, or horizontal support)
- Look for a reversal signal at the support level (bullish candle, increasing volume)
- Enter when you see confirmation that the pullback is ending
- Place your stop loss below the support level
Pullback Entry Example
Stock XYZ is trending up from $80 to $100:
- Price pulls back from $100 to the 20-day moving average at $92
- You see a bullish engulfing candle at the moving average
- Enter long at $93 the next day
- Stop loss at $89 (below the moving average)
- Target at $108 (previous high plus extension)
- Risk: $4 | Reward: $15 | Ratio: 3.75:1
Best Pullback Levels
- 20-day or 50-day moving average
- Previous resistance that has become support
- Fibonacci retracement levels (38.2%, 50%, 61.8%)
- Trend line support
2. Breakout Entry
Breakout entries involve buying when price breaks above a resistance level or selling when it breaks below support. Breakouts can lead to explosive moves, but they can also fail, so proper confirmation is essential.
How to Trade Breakouts
- Identify a consolidation pattern or resistance level
- Wait for price to break through with conviction (strong candle, high volume)
- Enter on the breakout or wait for a pullback to the breakout level
- Place your stop loss below the breakout level
Breakout Entry Example
Stock ABC has been consolidating between $45 and $50 for three weeks:
- Price breaks above $50 on double the average volume
- Option 1: Enter immediately at $50.50
- Option 2: Wait for price to retest $50 and enter there
- Stop loss at $48 (inside the previous range)
- Target at $55 (measured move: $5 range added to breakout)
Breakout Confirmation Checklist
- Volume: At least 50% higher than average
- Close: Price should close beyond the level, not just wick through
- Context: Breakouts in the direction of the larger trend are more reliable
- Time: The longer the consolidation, the more powerful the breakout
3. Moving Average Crossover Entry
Moving average crossovers generate entry signals when a faster moving average crosses above or below a slower one. This technique works well in trending markets.
Popular Crossover Combinations
- 9 EMA and 21 EMA: Faster, more signals, more whipsaws
- 20 SMA and 50 SMA: Good balance for swing trading
- 50 SMA and 200 SMA: Golden cross (bullish) and death cross (bearish) - slower but more reliable
Crossover Entry Example
Using the 20 SMA and 50 SMA:
- The 20 SMA crosses above the 50 SMA (bullish signal)
- Price is above both moving averages
- Enter long at the next day's open
- Stop loss: Below the 50 SMA or recent swing low
- Exit: When the 20 SMA crosses back below the 50 SMA
4. Candlestick Reversal Entry
Candlestick patterns can signal that a reversal is imminent. When these patterns appear at key support or resistance levels, they provide high-probability entry signals.
Bullish Reversal Candles
- Hammer: Small body at the top, long lower wick - shows buyers stepped in
- Bullish engulfing: Green candle completely engulfs the previous red candle
- Morning star: Three-candle pattern showing a shift from selling to buying
Bearish Reversal Candles
- Shooting star: Small body at the bottom, long upper wick - shows sellers stepped in
- Bearish engulfing: Red candle completely engulfs the previous green candle
- Evening star: Three-candle pattern showing a shift from buying to selling
Important: Candlestick patterns are most effective at key levels. A hammer in the middle of nowhere means little. A hammer at a major support level is significant.
5. Gap Entry
Gaps occur when price opens significantly higher or lower than the previous close. Some gaps fill quickly, others lead to continuation moves. Understanding gap types helps you trade them effectively.
Types of Gaps
- Breakaway gap: Occurs at the start of a new trend - often does not fill, trade in the gap direction
- Continuation gap: Occurs in the middle of a trend - confirms the trend is strong
- Exhaustion gap: Occurs at the end of a trend - often fills, trade the fill
Gap Entry Example
Stock DEF gaps up 5% on earnings:
- The gap is a breakaway gap (breaks out of a consolidation)
- Volume is extremely high (3x average)
- Entry: Buy at the open or wait for a small pullback
- Stop loss: Below the gap (the open of the gap day)
- Target: Let winners run using a trailing stop
Entry Technique Comparison
Different situations call for different entry techniques:
- Trending market: Pullback entries offer the best risk/reward
- Consolidating market: Breakout entries capture the move when the range breaks
- Volatile market: Candlestick reversal entries at key levels
- News-driven moves: Gap entries can capture momentum
Entry Order Types
How you place your order affects your execution:
- Market order: Enter immediately at current price - use when you need to get in now
- Limit order: Specify the maximum price you will pay - better for pullback entries
- Stop order: Enters when price reaches a level - good for breakout entries
- Stop-limit order: Combines stop and limit - more control but risk of not being filled
Analyze Your Entry Performance
Pro Trader Dashboard tracks your entry prices and shows you how much better or worse you could have entered. Optimize your timing and improve your results.
Common Entry Mistakes
- Chasing: Entering after a big move because you do not want to miss out
- Anticipating: Entering before confirmation because you are "sure" it will work
- Overcomplicating: Waiting for too many confirmations and missing the trade
- Ignoring context: Taking entries against the larger trend
- Inconsistency: Using different entry methods randomly instead of having a systematic approach
Summary
Mastering entry techniques is essential for swing trading success. Pullback entries offer the best risk-to-reward in trending markets. Breakout entries capture momentum when consolidations resolve. Moving average crossovers provide systematic signals. Candlestick patterns confirm reversals at key levels. Gap entries capitalize on momentum moves. Choose the technique that fits the current market conditions and always wait for confirmation before entering.
Now that you know how to enter, learn when and how to exit your swing trades. Also check out our guide on selecting the best stocks for swing trading.