Stock Market Glossary
Trading plan
Written strategy with clear rules for entry, exit and risk management.
In brief: Written strategy with clear rules for entry, exit and risk management.
Meaning in practice
The trading plan is the most important discipline aid. It defines setups, maximum risks per trade, daily loss limits and behavior in special situations – and protects against emotional gut decisions.
Context for investors and traders
For traders, this term is most useful when preparing and executing an order. Its meaning depends on the venue, liquidity, time frame and order type. A single reading is not a reliable buy or sell decision.
How to use this in practice
Use the term first to describe the situation and add verifiable data: time frame, benchmark, costs and liquidity. Only then does it become an assessment that can be connected to an investment objective and risk budget.
What to keep in mind
Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.
