Tips for a Winning
Stock Trading Plan

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Writing a winning stock trading plan is a terrific way to seed your investment success.

Entrepreneurs of start-up companies use business plans to outline their plan for operation. Many aspects of your trading activities will be similar to having your own personal small business. You’ll have to make decisions, manage profits and losses, look for new products (stocks), review your progress and more.

Once you have a plan and system for trading, it will be your guide to success. You can change or tighten up any part of your system as you proceed to trade and learn.

Below are a group of questions to help you put together a dynamite stock trading plan.

  • What's your compelling reason for investing in the stock market?
  • How much money do you have to open your trading account? If it’s an account you'll continually contribute to, how much will you put in each month?
  • What are your near-term goals or multi-year financial objectives? Do you want to do as well as the major indices or better?
  • How will you choose the

    best stocks to buy?

  • What stock market strategies will you use?
  • What's the technical setup you'll look for that will signal a buy?
  • How will you go about position sizing?

  • How will you handle risk management in a stock position?
  • If you have more good candidates than you can purchase, how will you choose which one(s) to buy?
  • What is the maximum number of positions you'll have in your portfolio at any one time?
  • Will you purchase more good stocks to buy that are doing well? What's the criteria for doing so? What's the maximum amount of money you'll put in any one position?
  • How often will you reevaluate your positions or look for stocks to purchase?
  • How long will you keep any nonperforming stocks?
  • How will you go about tracking stock trades?

  • How will you determine the stock market trend to determine the best times to buy?
  • What kind of order will you use to enter or exit a position?
  • When during the day, week or month will you place stock orders?
  • What's your plan for selling stock?

  • How will you know when to sell a stock that's going down?
  • What's your plan for how to sell stocks after a gain?
  • When will you review any stocks that you sold?
  • What type of triggers, stops or alerts will you use?
  • How often will you revisit your progress and compare it to your goals? Weekly, monthly or quarterly?
  • How will you continue to improve your trading skills?

  • Have you written out your plan and is it nearby to refer to if you feel emotional or stuck in a situation?

If you don't have a plan in writing it's easy for emotions to take over. Your stock trading plan is your set of rules. The only time to change the rules is when you're calm and collected with viable reasons for doing so. Investing your money is not a time act on a "whim" or a feeling. If you have a written out plan, what you're doing is empowering yourself to be in charge and be confident that the discipline it takes to succeed will have support and be easier to implement.

By planning for your trading activity, you create a healthy environment for stock trading success.

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