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.

BREAKING DOWN '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.

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