Stock Market Trading Plan

Submitted by Stock Market News on 28 April, 2011 - 17:19

How to start a trading plan

The stock market can be really harsh to beginners, so apart from research making a trading plan is sensible to guide you through. Unfortunately not all plans work. As a matter of fact, some traders don't even make a plan. They ride the trends instead of trying to analyse the stocks. Whether you want to dive in or write a plan of our own, it doesn't really matter as long its profitable. Every plan or strategy is different from one trader to another, because they use what works for them.

How to start:

Your plan will depend on what type what financial instrument you're going to trade, your risk profile, what type of analysis you choose, and what type of market you want to trade. You can choose to write down a plan, test it and tune it. If it works then you stick to it, but don't be afraid to make adjustments when need be. There are also a lot of books about trading plans. You can do your own research to get an idea of the key ingredients your plan should have.

Key components:

  • Entry
  • Exit
  • Money management
  • Risk Management

Anything can happen in the stock market. Both technical and fundamental analysis provides indicators not a strict set of standards. It all depends on your trading habit and style. Are you the type who prefers to a methodical approach or work your way as you go along? Whether you choose to plan how your trade will play out, or focus on money management, trade what you know, develop what you are comfortable with, and make realistic expectations based on your abilities.

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