Invalidation point
Also called: invalidation level, failure point, time stop
The price or condition, set before a trade, at which the trade's idea is clearly wrong and the position should be closed.
The invalidation point should come from the hypothesis, such as a close back inside a range after a breakout, rather than from how much loss feels comfortable. A stop-loss order usually carries it out, and position size controls the rupee loss at it.
Learn more in these lessons
- Entry and exit planningHow do you plan when to enter and exit a trade?
- Placing stop-lossesWhere should a stop-loss be placed?
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