Where exactly is the entry, and what invalidates it?

This is the chapter people read first, and it is the one where most plans fall apart. A zone is an area. A trend is a direction. Neither is an order. The fourth question makes you turn an idea into two numbers before you touch the ticket: the price and condition that get you in, and the price that proves you wrong.

The trigger

An entry is a trigger, not a feeling. It has a price and a condition, and you can say it out loud: "a daily close back above 151.50 after touching the zone", or "a break of the previous hour's high while price is still inside the box", or "the first higher low on the hourly after the daily zone is tagged". Pick one kind of trigger and use it consistently. The exact trigger matters less than having one, because the trigger is what stops you buying the first dip into the zone and then the second and then the third.

Notice that all of those triggers ask price to do something first. They wait for the zone to show it is holding before committing. You will miss the exact low every time. That is the cost of not catching the ones that keep going down.

The "I'm wrong" line

The stop is not where the loss becomes uncomfortable. It is where the reason for the trade no longer exists. If you bought because a support zone was holding, you are wrong when price is clearly through the bottom of the box, with a little room for a wick. If you bought a higher low, you are wrong when that low is taken out. The stop goes on the far side of the thing you are leaning on, not at a round dollar amount you can stomach.

This is why the middle of the chart is untradeable. In the middle there is nothing to lean on, so the stop is either enormous or arbitrary. At a zone, the stop is obvious: just beyond it.

Stop versus exit

Do not confuse the stop with the only way out. The stop is the line that says the thesis is dead. There are other reasons to leave a trade before it is hit: the trend on the higher timeframe changes, a catalyst arrives that changes the picture, or the trade simply goes nowhere for longer than the plan allows. Those are exits and they belong to question seven. The stop is the one line that is never moved further away, because moving it means you are no longer trading the thesis you wrote down.

Give the stop room, then respect it

Stops placed exactly at the edge of a zone get hit by wicks that go on to reverse. Place it beyond the box by a margin that matches the stock's normal noise. For a daily setup, something like a third to a half of an average day's range past the zone is a fair starting point. Then leave it alone. The most expensive habit in trading is moving a stop down because "it is about to bounce".

Waiting versus chasing

Two failure modes here. The first is buying before the trigger because the zone "looks like it is holding". The second is buying well after it, when price is already three percent above the zone, because now it "looks confirmed". The first puts you in trades that were not setups. The second gives you the setup with a stop so far away that the reward against the risk no longer works. The trigger is the middle path, and if you miss it, you missed it. There is another one tomorrow.

Example

This is a made-up example. XYZ again: the 147.80 to 151.20 zone, weekly uptrend, no earnings for six weeks. Price has been inside the box for two days and today closed at 151.90 after dipping to 148.30. Your trigger was a daily close back above 151.50 after a touch of the zone. It has happened, so tomorrow's open is the entry, near 152. The stop goes under the swing low at 148.30 with room for a wick, at 146.80. That is about 5.20 of risk on a 152 stock, roughly three and a half percent. Both numbers are on paper before the market opens.

If instead price had closed at 147.10, below the box, the trigger never fires. There is no trade to manage and nothing to feel bad about. The zone told you where to look; it did not promise anything.

The question, answered

An entry is a price and a condition you can say out loud, and it waits for the zone to hold.
The stop goes on the far side of what you are leaning on, with room for a wick.
Both numbers are written down before the order and the stop is never moved further away.
If you cannot name where you are wrong, there is no trade.

This is the question the Slingshot indicator is built to answer.