A trading plan turns scattered decisions into a repeatable process. If it is not written down, it is not a plan — it is a mood.
What a plan covers
- Goals & constraints — time available, capital you can risk, target return, max drawdown you will tolerate.
- Markets & timeframe — what you trade and on which chart.
- Setups — the specific, repeatable conditions you will act on (and nothing else).
- Entry & exit rules — exact triggers for getting in, taking profit, and stopping out.
- Risk rules — risk per trade (e.g., 1R = 1%), daily loss limit, max open positions.
- Routine — pre-market prep, during-session rules, post-session journaling.
A sample one-page plan
Risk per trade: 1% · Min reward-to-risk: 2:1 · Max trades/day: 3 · Daily stop: −3R
· Only long above the 200-day MA · Journal every trade
Backtest, then forward-test
- Backtest — check whether your setup had an edge on historical data.
- Paper / small-size — trade it live with tiny or simulated size to test your execution, not just the idea.
- Scale up slowly — only after the process is consistent, not after a few lucky wins.
Review on a schedule
Once a week, review your journal:
- Did you follow the plan? (Process score, separate from P&L.)
- What is your win rate and average R?
- Which setup is carrying you — and which is bleeding you?
Edit deliberately
Change one rule at a time, and only with evidence from your journal. Constant tinkering destroys the very consistency a plan exists to create.
Educational only
This is a framework, not advice to trade. Most new traders lose money; trade only risk capital, and consider mentorship before going live.