Identifying Entry and Exit Points in Investment


When you retire, you let go of any source of steady income that you might have had. If you’ve been a working employee your entire life, you will have to relinquish your job to someone younger and could take over for you. In return for your faithful service to the company, you are given a severance and retirement bonus as a means for you to start a new beginning on your own terms.

Retirees don’t have the luxury of spending their bonuses the way they would want to
, because there’s nothing else coming for them in terms of monthly compensation. So, if you’re a retiree, you could make use of your money and invest it in a business or the stock market!

As mentioned in a previous article, investing is a risk but one that’s doubly rewarding if done right. One way of doing it right is to identify entry and exit points, especially if you deal in stock exchange or foreign exchange.

As a small recap, entry points are simply instances where you enter the market and make an investment, i.e buy stock or wager in a certain foreign currency pair. Exit point is when you withdraw your investment, because of factors that you determine beforehand. To put it simply, they are simply events in which conditions you put for your buying and selling have been met.

Choosing Entry Points

It’s actually a lot easier to make entry points than identifying exit opportunities. Part of that is human nature, but we’ll talk about that. When you invest, the value and the price should be central to your decisions. Now, in a market environment, prices will go up and down, as you might’ve already noticed if you’re following financial news. Which point makes a stock or a foreign currency pair ideal for investment?

Investing basics will tell you to invest on a financial instrument when the price is down. This one goes beyond the concept of “Cheaper is better.” This is because the amount of money you put into the investment goes into buying units of that financial instrument. At a price of $5 per stock, for example, a $1000 investment buys you 200 units of stock. That is what you own.
When the price goes up to $6 per stock, your 200 units is now worth $1200, gaining you a profit of $200. Of course, prices can still go down according to conditions in the market.

Choosing Exit Points

Here’s the tricky part. As mentioned earlier, human nature can get in the way of identifying exit points. This is because people to hold on to profit as much as possible in the hopes that it will get higher. However, when investing, if the price has reached a certain point that’s already a big profit, it will trigger a selling spree – short-term investors will withdraw their investment en masse, and will drive a downward spiral in prices.

So, if you see the price of your stock going steadily down, sell it. If you have gained enough profit, sell it. It could go down drastically before you know it. If it goes down and you haven’t earned a profit yet, sell it anyway if you’re a short-term investor as a means to limit your losses.

Doing business is good, especially in Thailand. Contact a legal advisor and find out how you can make investments as a foreigner in this foreigner-friendly country.

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