Trading Plan

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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RELATED FAQS
  1. How do markets account for systematic risk?

    Find out how market participants deal with systematic risk, or the kind of market risk that cannot be diversified away through ... Read Answer >>
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    Understand how systematic risk can influence the prices of stocks and how strategic asset allocation can help reduce systemic ... Read Answer >>
  3. What is the difference between inherent risk and systematic risk?

    Learn about inherent and systematic risk, two types of risk that affect investments, the differences between them and how ... Read Answer >>
  4. What is the difference between systemic risk and systematic risk?

    Systemic risk is generally used in reference to an event that can trigger a collapse in a certain industry or economy, whereas ... Read Answer >>
  5. How do you plan for retirement if you have multiple employers? Can you combine retirement ...

    Retirement planning for those who work for more than one employer is essentially the same as for those who work for only ... Read Answer >>
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