Automated trading has revolutionized the financial markets with some drastic changes. Over time, the market has grown to USD 17.38 billion in 2025, projected to expand to USD 30.26 billion by 2034. However, more traders are switching to this automated setup and focusing on applying different trading strategies besides executing trades at lightning speed.
One critical aspect of this trading method to achieve success is the ideal setup of making a good entry and exit signal. Some traders prefer an approach where trade entries are automated, while exits require manual approval. Here, these parameters work accurately, protecting a trader's capital. In this blog, we will explore the fundamental concepts and steps required to set up an ideal entry and exit signal based on the parameters for an automated setup.
What Makes a Good Entry & Exit Signal in an Automated Setup?
The best entry exit strategy in an automated trading setup is clear and very objective. It mostly relies on a proper combination of effective technical indicators (like moving averages, RSI, and volume). These are support/resistance levels and specific price action patterns to identify ideal and favorable market conditions. The strategy should also define different conditions for entering an ideal trade with high profit potential, and you can exit successfully by securing gains or limiting losses before a significant trend reversal.
What Makes a Good Entry Signal?
A good entry signal must give you a higher probability of entering an ideal trade when the price usually moves in your favor.
Favorable Conditions:
It even helps to identify some ideal conditions where the asset is potentially oversold or has strong buying pressure.
Confirmed Trend:
It confirms developing an ideal trend, such as when the price amount crosses a moving average. It provides confidence in the trade's direction.
High-Probability Trades:
The signal also indicates a higher chance of price movement in the desired direction. This reduces the risk of being caught on the wrong side of a trade.
What Makes a Good Exit Signal?
A good exit signal also helps you lock in some significant profit besides cutting the losses. You can also get the chance to identify the optimal time to leave a trade successfully.
Profit Targets:
Set exclusive profit targets, such as reaching a specific price level or focusing on reaching a percentage gain. These help you secure significant profits.
Trailing Stops:
Implement an ideal and trailing stop-loss to protect the profits by moving the stop-loss up as the price moves favorably. Also, focus on exiting the trade if the trend reverses significantly.
Trend Weakening or Reversal:
The signal identifies when the existing trend starts to weaken or reverse. These are the Relative Strength Index (RSI), which moves from oversold to overbought conditions.
Loss Limitation:
It includes proper stop-loss orders to limit potential losses if the trade moves against you.
How to Establish a Real and Measurable Edge?
The first rule of automated signals is to demonstrate a statistical and clear edge that allows traders to survive realistic trading conditions.
Backtesting isn't enough:
Before applying an option chain strategy or an automated trading strategy that looks perfect, but often fails in live trading. Proper out-of-sample validation and walk-forward testing are non-negotiable.
Regime awareness matters:
Different trading markets in high vs. low volatility phases, bull vs. bear cycles, and even those work during some major news. A robust signal should work — or at least fail slowly — across these conditions.
As more trades shift to electronic venues, it is expected that the market may see a significant rise from 65% in 2024 to 73% in 2025 —finding and defending a true edge is more challenging than ever.
Setting Up Automated Entry with Manual Exit Approval
To implement the best entry exit strategy approach, you must learn how to set it up properly with an automated trading platform.
• Create Two Strategy:
Set up the first strategy that works to automate some trade entries. Then, it helps automatically submit trades when the accurate conditions are met. Also, configure the second strategy for exits that ensures an auto-submit is turned off. Therefore, you can ensure the exit trades must be manually approved.
• Set Up Patterns for Each Strategy:
Use separate patterns for each strategy whether for Option chain strategy or algo that directly impact different entry and exit signals. This allows the automated entry signals to be processed immediately, and you can easily focus on manual approval.
• Manual Approval of Exit Trades:
When the exit signals often come through, a manual review helps to approve them within time. This approach gives you a better flexibility to assess different market conditions and according to that you can easily adjust exit timing as needed.
Steps to Follow for An Automated Entry With a Manual Exit Approval
Combining some automated entries with manual exit approval is a balanced and effective trading approach. Using the latest technology it helps in proper decision-making under human control. Below are the key steps:
Define Entry Parameters
Set clear algorithmic rules for some accurate trade entries, such as price breakouts, moving average crossovers, or even volume surges. However, each of these methods should be properly backtested to ensure consistency.
Automate Order Execution
Integrate some predefined rules into your trading platform, and only then can you trade automatically and avoid delay in execution once the conditions are met.
Set Risk Controls
Establish the stop-loss levels, position sizing, and capital allocation rules within the automated trading system. This always ensures that different trading risks are properly managed and traders can get the best results even before manual exit decisions are made.
Monitor Trade Progress
Once a trade is live, it is necessary to track performance against your applied strategy metrics. In case of the best entry exit strategy, the automated alerts can easily notify you of some significant changes about the price movement or market volatility.
Focus On Manual Exit Approval
Review each trade before closing the trade. Different factors work there. For example - market news, technical setups, or even some unexpected volatility that may influence your exit decision. Moreover, approving exits manually allows flexibility while retaining overall control.
Looking for the perfect entry and exit signals?
Build and test your strategy on SpeedBot.
Benefits of the Automated Entry and Manual Exit Setup
While an option chain strategy or an algo trading one, the right setup offers a perfect blend of automation and manual oversight. While automated entries ensure that trading opportunities are captured quickly, manual exits assist with better decision-making based on market changes and real-time analysis.
Similarly, automated entries reduce the emotional impact of trading, as traders often miss or avoid opportunities due to fear or hesitation. At the same time, manually approving exits from traders helps traders make a thoughtful approach to managing the ideal positions within trades. This, as a result, improves trade outcomes.
Using two separate strategies provides greater flexibility to fine-tune each component independently. For example, you can pass the proper entry criteria without affecting the overall entry and exit strategy. These help traders make choices based on different market conditions.
Considerations and Challenges
Even with automated trading, traders often face some complexities. They need to understand different configurations that are correctly aligned to avoid mismatches in proper trade execution. Also, some manual approval may introduce delays in exiting trades, which could be a disadvantage in fast-moving markets. So, it is focused on some additional configurations.
Closing Up
Perfect timing doesn't exist—profitable timing does. So, while performing trading, never think of market volatility or institutional algorithms as your competitor, rather wait for better timing using the best entry exit strategy. Also, remember that the best intraday strategy can help you to execute consistently without constantly affecting the trading parameters.
When you use an algo trading software, strategies get developed at the perfect time, and those can be executed successfully. Try to master that concept and trade confidently in an automated setup.
