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Stock Market Trading Plan

It seems nowadays the stock market investor has more pitfalls than ever that must be overcome to ensure success, which is why you must have a stock market trading plan. It is often difficult to know where to start when choosing the right plan for you. Everyone is different and so too are their investment goals, financial situations and tolerance for risk. The first thing you will need to do is determine what type of investor you are.

So what type of investors need a stock market trading plan? The passive investor might only be interested in low risk low return investments that have little need for daily guidance but have a predictable rate of return. The active investor, who is making longer term , more risky trading decisions with individual stocks, or maybe a swing trader who only stays in positions for a short period of time? Your answer to these questions will greatly influence what type of stock market trading plan will fit your circumstances.

Why do you need a stock market trading plan? A good trading plan acts as a financial road map to guide your decisions. You must use this road map during trading hours so that your emotions, fear or possibly even greed dont get the better of your trading decisions. Consistent results require that you make consistent decisions based your stock market trading plan and not your emotions.

What should be in your stock market trading plan? You should state the rules by which you will be trading by, such as when you will enter and exit trades, and what percentage of your money you are willing to commit to 1 trade. You should also determine what type stocks you will be trading, big cap, penny stocks or maybe even stock options. whatever you decide in your plan be sure to place them in your trading diary or tape them to your desk in plain sight so that you will remember to follow them.

There is no right or wrong way to devise a stock market trading plan. The biggest mistake beginners make is that, even though they make a plan they are unable to follow it. What good is it to make a plan if you aren’t going to use it? So if your a beginning trader or maybe even a trader with some experience under your belt, take the time to sit down and draw a financial road map that will govern your trading. Remember, over 90% of traders lose money in the stock market. By making a stock market trading plan you will go a long way towards getting yourself in that 10% that are making money. While this is certainly not an in-depth article on making a stock market trading plan there are many good books on this subject available.

Stock Market Explanations – Any Dream Can Be Reality

Short term trading can be very rewarding, or it can be very devastating. First and foremost, you must know the market fairly well, but you also must know a few things about the individual behavior of the stock that you want to trade. Some stocks are fairly well suited to small term trading, while others simply are not a great choice. Knowing the way that a stock has been behaving between trading sessions is one of the main keys to short term trading success, but there are other factors to consider as well.

A big hint is that you need a set plan before you ever even think about beginning. How you perform these trades is often a very crucial thing. There are five main trading patterns that can be used for short term trading, and one main concept that applies equally to all five. No matter how you choose to handle your short term trading, you must have self-discipline. If you do not have discipline, then you should not be buying stocks until you master the concept.

In life, there are many things that require such self-discipline, from dieting to smoking, but this can be just as much of a health risk. Your financial well-being is at risk, so do not put any of your short term trading plans into action until you have mastered the art of self discipline.

Traders can use trend trading, counter-trend trading, breakout trading, pullback trading and reversal trading- although this latter term is not so much a type of trading as it an overall part of the whole picture in a short term trading strategy. Trend trading has the least in common with short term trading, and requires some extra patience that might not really be available to the short-time traders.

This type of trading will focus on these factors, as well as whether the long-term trend of that particular stock is up or down. You should also factor in whether or not the stock market is taking large moves in either direction (up or down) or if it is stagnant (volatility). Are there many buyers or sellers for this stock (volume)? And is the stock market ending with the highs and lows at more extreme levels, i.e., higher highs or lower lows (trend)?

The Stock Market For Beginners – How to Learn About Trades

The stock market is in the news almost every day now. If you’re new to investing or just want to know a bit more about it, here is a guide to the stock market for beginners.

First, you have to know what the stock is. Stocks, also called equities, are small pieces, or shares, of ownership in a company. Companies sell these to raise money for any number of reasons, from financing large capital purchases to expansion of their operations. Trading ownership in a company for money like this is called equity financing.

Once the company decides to sell shares of itself, there needs to be a place to sell it, preferably a place where like minded people congregate to buy and sell such shares. That place is called the stock market. In some cases this is an actual, physical place. The New York Stock Exchange has an exchange building in New York City. Other exchanges, such as the NASDAQ (pronounced nas-dak) exist purely in the virtual world.

Stock exchanges exist in many of the world’s developed countries, with the largest ones being concentrated in the financial centers. Japan has the Nikkei in Tokyo, Britain has the London Stock Exchange, and Hong Kong is home to the Hong Kong Stock Exchange. Typically a company will be traded on the exchange in it’s home country’s exchange.

Any trade needs two parties, a buyer and a seller, and stock trades are no different. If you’re buying or selling shares on any of the larger exchanges, you won’t do the buying and selling directly, you’ll go through an intermediary called a broker. Brokerage firms have what is called a “seat” on the exchange, meaning they are authorized to do actual buying and selling on other’s behalf.

Your job is to choose what company you want to buy or sell. This is normally done through careful research, either the old fashioned way, or using sophisticated software. The are nearly as many schools of though on choosing companies to invest in as there are companies in which to invest.

There are two general ways you can trade stocks. You can have a full service broker that assists you in determining a company in which to purchase stock. If you’re more the type that likes to make their won decisions you’ll probably use a discount broker that will allow you to pick your own stocks, then buy them through a telephone call or by going online to the broker’s website. Either way the broker makes the transaction.

There is usually some sort of charge or fee paid to the broker to make a stock trade. The full service broker will typically charge more to cover their greater service. The dawn of the Internet has allowed people to have huge amounts of industry, market, and company data at their fingertips. This enables people to do their own research that was simply not possible 20 years ago.

One of the main criteria in choosing a company in which to buy stock is to know why you’re buying it. Are looking to fund retirement that’s years away, or are you trying to make money relatively quickly. Perhaps you need to preserve savings you have in the face of possible inflation. Strong future inflation could be a very real concern as the U.S. government continues to print and spend money for various bailout and stimulus packages.

Once you’ve chosen a company in which to invest, you’ll need to contact your stock broker to purchase shares. They make the trade for you. You’ll be able to choose from several kinds of orders; you’ll place either a sell or a buy order, depending on weather you’re selling or buying. There can also choose weather you want to place a market or limit order.

A market order is executed at the market price as soon as the trade can be made. With a limit order, you can set limits on how much you want to pay or sell for. If the stock goes above the limit you set in the case of a buy order, the trade will not be executed. This protects you from paying more than you want to for a particular stock in the event the price is rapidly moving.

One of the keys to trading stocks is to know why you’re trading, and choosing the broker that most closely matches your needs. If you want the freedom and flexibility to make your own trades when you want to, choose the online broker that has the features and level of service you’re comfortable with. Pay careful attention to the research tools they offer, and how user friendly their online interface is. You should also check their rates. Look at any monthly fees and their cost per trade.

Just because you are a novice doesn’t mean that you should stay away from the stock market. Even in a down economy there are is still money to be made there. After all, many excellent companies have seen the price of their stock fall dramatically in recent months. This means they represent excellent values for the seasoned investor and the stock market beginner alike.