Trading Plan

AAA

DEFINITION of 'Trading Plan'

A systematic method for screening and evaluating stocks, determining the amount of risk that is or should be taken, and formulating short and long-term investment objectives. A successful trading plan will also involve details like the type of trading system to be used. Most plans require the use of various types of technical analysis tools.

INVESTOPEDIA EXPLAINS 'Trading Plan'

Trading plans can involve any level of risk and accomplish many different investment objectives. Good trading plans will also provide guidance on trading strategies for stop-losses. Diversification and flexibility are other important factors to consider.

RELATED TERMS
  1. 2% Rule

    A trading practice where an investor should concentrate no more ...
  2. Trade Date

    The month, day and year that an order is executed in the market. ...
  3. Security

    A financial instrument that represents: an ownership position ...
  4. Trade

    A basic economic concept that involves multiple parties participating ...
  5. Broker

    1. An individual or firm that charges a fee or commission for ...
  6. Pegging

    1. A method of stabilizing a country's currency by fixing its ...
RELATED FAQS
  1. What are the advantages and disadvantages of using systematic sampling?

    As a statistical sampling method, systematic sampling is simpler and more straightforward than random sampling. It can also ... Read Full Answer >>
  2. How effective is creating trade entries after spotting a Tri-Star pattern?

    The tri-star patterns, both bullish and bearish, are about as rare as they are unreliable. Comprised of three consecutive ... Read Full Answer >>
  3. How important are descending tops for a trading strategy?

    The descending tops pattern is one of the most commonly occurring chart formations in technical analysis. In trading terminology, ... Read Full Answer >>
  4. How is buying on margin regulated by the Securities and Exchange Commission (SEC)?

    The Federal Reserve Board and the Financial Industry Regulatory Authority (FINRA) regulate buying on margin to a greater ... Read Full Answer >>
  5. What are the most popular forms of technical analysis?

    The most popular forms of technical analysis are simple moving averages, support and resistance, trend lines and momentum-based ... Read Full Answer >>
  6. What is the difference between technical analysis and fundamental analysis?

    Fundamental analysis and technical analysis are distinct methods used to research and evaluate securities. Fundamental analysis ... Read Full Answer >>
Related Articles
  1. Active Trading

    How To Break Bad Trading Habits

    It isn't making money on each trade that counts, but developing a long-term plan that works.
  2. Active Trading Fundamentals

    3 Psychological Quirks That Affect Your Trading

    There are human tendencies that can block the road toward achieving our financial goals. Here's how to get around them.
  3. Forex Education

    10 Ways To Avoid Losing Money In Forex

    When approached as a business, forex trading can be profitable and rewarding. Find out what you need to do to avoid big losses as a beginner.
  4. Forex Education

    Using Double Tops And Double Bottoms In Currency Trading

    Find out how to apply the two most common price reversal patterns to your trading.
  5. Active Trading

    An Introduction To The Relative Strength Index

    Learn the difference between relative strength and the relative strength index, a frequently used technical analysis oscillator.
  6. Forex Education

    Forex: Should You Be Trading Trend Or Range?

    In FX, it's not the price environment that decides this for you. Learn the differences to see which you prefer.
  7. Forex Education

    Using Feedback To Improve Your Trading

    Positive and negative trading experiences can affect the way you trade. Find out how.
  8. Active Trading

    Finding The Right Trading Coach

    If you're looking to master the art of trading, you may think you need an expert trader. What you may really need is an expert teacher.
  9. Active Trading

    Peak-and-Trough Analysis

    Prices never move in straight lines, so it's time to learn about this powerful trend-following technique.
  10. Trading Strategies

    The Multiple Lives Of A Stock Trader

    Any trading career will have its ups and downs. Find out how to maximize the good times.

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center