LESSON 04
Plan Your Entry, Stop, and Target
A scanner result becomes useful only after it is turned into a clear plan. This lesson explains how to identify a possible entry, decide where the trade idea would be considered wrong, and choose potential targets before risking money.
BEGINNER PATH · LESSON 4 OF 5
Plan the Trade Before You Enter
A trade plan should be created before an order is submitted. The plan defines what must happen before entering, where the idea would be considered wrong, and where potential profits may be taken.
Research Candidate
Entry Plan
Stop Plan
Target Plan
Position Size
Paper Trade or Pass
The goal is not to predict the future. The goal is to define the risk before taking action.
BREAKOUT ENTRY
An entry considered after price moves above a clearly identified level.
What Is an Entry?
An entry is the price or condition at which a planned trade would begin. A clear entry should be based on a defined setup—not excitement, fear of missing out, or a rapidly moving price.
A planned entry does not mean an order must be placed. If price moves beyond the original plan or the setup conditions change, the trade can be skipped.
PULLBACK ENTRY
An entry considered after price returns toward an area of support or a previously identified level.
CONFIRMATION ENTRY
An entry considered only after additional price, volume, or trend confirmation appears.
What Is a Stop?
A stop is a planned price level showing where the original trade idea would be considered wrong or where the potential loss should be limited.
A stop should have a reason. It should not be placed randomly or changed simply because the trade is moving against the plan.
A Stop Level, Alert, and Stop Order Are Not the Same
A planned stop level is part of your written trade plan. It is not automatically active at your brokerage. An alert only notifies you when price reaches a level, while a stop order is an instruction submitted to the brokerage.
PLANNED STOP LEVEL
The price where your written trade idea would be considered wrong. This level exists in your plan unless you take another action.
PRICE ALERT
A notification that price has reached a selected level. An alert does not automatically sell or close the position.
STOP ORDER
An order submitted to the brokerage that becomes active when the stop price is reached. The final execution price is not guaranteed.
Writing down a stop level does not place an order. Confirm whether you are using an alert, an active stop order, or a manually managed exit.
Below a Support Level
A stop may be planned beneath a price level that was expected to hold.
Below the Setup Structure
A stop may be placed where the chart pattern or trade idea is no longer valid.
Volatility-Based Stop
A stop may account for the stock’s normal price movement so ordinary fluctuations do not immediately invalidate the setup.
A stop order does not guarantee an exact exit price. Fast price movement, gaps, limited liquidity, or slippage may result in a different execution price.
What Is a Target?
A target is a planned price area where part or all of a position may be sold if the trade moves favorably.
Targets may be based on nearby resistance, previous price levels, measured price movement, or a planned relationship between potential reward and risk.
First Target
A nearer level where part of the position may be reduced.
A target is a planning tool, not a guaranteed future price.
Second Target
A farther level that may be considered if the setup continues working.
Trailing Exit
An exit method that adjusts as price moves, rather than using one fixed final target.
Understanding Risk Per Share
Risk per share is the difference between the planned entry price and the planned stop price.
Ticker:
Planned Entry:
Planned Stop:
Risk Per Share:
$25.00
XYZ
$24.20
$0.80
$25.00 Entry − $24.20 Stop = $0.80 Risk Per Share
EDUCATIONAL EXAMPLE — NOT A REAL SECURITY OR RECOMMENDATION
How Position Size Connects to Risk
The number of shares determines how much money may be lost if the planned stop is reached.
Maximum Planned Loss:
Risk Per Share:
Possible Position Size:
$40.00
50 Shares
$0.80
$40.00 Maximum Planned Loss ÷ $0.80 Risk Per Share = 50 Shares
Position size should be calculated from the planned risk. The amount of money available in the account should not automatically determine how many shares are purchased.
This simplified example does not account for slippage, gaps, fees, or execution differences.
Risk and Reward
Risk and reward compares the planned potential loss with the possible gain to a target.
Entry:
Stop:
Target:
Risk Per Share:
Potential Reward Per Share:
Planned Reward-to-Risk:
$25.00
$24.20
$26.60
$0.80
$1.60
2 to 1
In this example, the possible target is twice as far from the entry as the planned stop. This does not mean the target will be reached or that the trade will be profitable.
A reward-to-risk calculation helps compare the plan. It does not predict the result.
A Complete Sample Trade Plan
Ticker:
Scanner Status:
Market Regime:
Trend:
Possible Entry:
Planned Stop:
XYZ
Further Research
Bullish
Improving
$25.00
$24.20
First Target:
Second Target:
Risk Per Share:
Maximum Planned Loss:
Possible Position Size:
Plan Status:
$25.80
$26.60
$0.80
$40.00
50 Shares
Paper Trade Only
SAMPLE PLAN — FICTIONAL DATA ONLY
This plan defines the possible entry, stop, targets, and position size before an order is considered. It does not guarantee that the trade will work.
When the Plan Should Be Rejected
No Clear Entry
There is no specific price or condition for beginning the trade.
No Logical Stop
There is no reasonable level showing where the idea would be considered wrong.
Stop Is Too Far Away
The potential loss is too large for the planned position size.
Target Is Too Close
The possible reward may not justify the planned risk.
Price Has Already Moved
The stock has moved too far beyond the planned entry, changing the original setup.
Missing a trade is not the same as losing money. A plan should not be chased after its original conditions have changed.
Do Not Move the Stop Without a Reason
Changing a stop simply to avoid accepting a loss can turn a controlled risk into a much larger loss. A stop may sometimes be adjusted as part of a written management rule, but it should not be moved farther away simply because the trade is losing.
Disciplined Adjustment
Follows a written rule established before or during the trade.
Emotional Adjustment
Moves the stop farther away because the planned loss feels uncomfortable.
The stop is part of the plan, not a suggestion to reconsider only after the trade begins losing.
Your Pre-Trade Checklist
I confirmed the ticker and company name
I reviewed the Market Regime
I reviewed the Confidence Score and Trend
I identified a specific entry condition
I identified a logical stop level
I identified one or more potential targets
I calculated risk per share
I calculated a position size based on planned loss
I understand the order may fill at a different price
I am prepared to paper trade, watch, or pass
If the plan cannot be explained clearly before the trade, the setup may not be ready.
The Most Important Takeaway
Key Takeaway
The entry defines where the plan begins. The stop defines where the idea is considered wrong. The target defines where potential profits may be taken. Position size determines how much money is actually at risk.
These pieces should be planned together before an order is submitted.
Ready to Practice the Process?
The next lesson will show you how to practice Boom Stalker setups using simulated money, record the results, and review whether the plan was followed.
Boom Stalker provides educational and research information only. Entries, stops, targets, position sizes, scanner results, and sample trade plans are not personalized financial advice or instructions to buy or sell any security. Stop orders may execute at prices different from the planned stop. Investing and trading involve risk, including the possible loss of capital.