Terms in trade plan explained No ratings yet.

The practical applicability and meaning of terms used is trade plans given has been explained below:

Trigger price 1- is the price range which if seen in stock, is taken as an opportunity to build position in the particular stock. The advantage with this is that the cost of the position is lowered as entry is done at a lower price range.

Trigger price 2- If the stock opens up at a higher than ‘trigger price 1’, this is the next price level where new positions can be built.

Target1- as the name suggests, is the first price target, which is aimed upon.

Target 2- as the name suggests, it is the second probable price target expected in the desired time frame.

Stop loss- The stop loss for each and every position is 2% below the entry price. If you are a conservative trader, place stop at 1.5 % of the trade so that the maximum loss is always protected at 1.5% per trade.

Trailing stop loss- Once the position is taken in a particular stock and target 1 is achieved , this ‘target 1’ automatically becomes your trailing stop loss as the stock advances towards target 2, so that at any point of time, if the stock starts retracing the profit is locked at target 1.

Holding Period- All stocks have holding period of 1-5 days, which implies that if target is achieved within a day , the call will stand closed.

Please rate this

Author: Traders' Chowk

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.