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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.
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==== ==== Please check out Trading Pro Edge System for great tips on Stock Market Trading for Profit. www.tradingproedgsystem.com ==== ====