1. What is a Trading Plan

A trading plan is a written description of how you will trade: when to enter, when to exit, how much to risk, which markets/timeframes. It pre-answers the questions before money is on the line, so when the market moves you just execute instead of deciding in a rush.

2. Why it matters

  • Without a plan, every trade is an ad-hoc decision — impossible to judge as right/wrong, impossible to improve.
  • The plan is what discipline holds onto. FOMO, revenge, overconfidence are hard to break when there's a clear plan to check against.

3. What a plan contains

  • Markets & timeframes you trade.
  • Entry criteria (concrete, not vague).
  • Stop loss and how to place it (see Risk Management).
  • Take-profit target / exit method.
  • Risk per trade (%) and how to size.
  • Stop rules (daily/weekly/monthly loss limits).
  • Trading hours (when you trade, when you don't).

4. How to apply

1. Write the plan on paper/file, concrete enough that someone else could follow it. 2. A trade must fit the plan to be taken; if not, skip it. 3. Don't edit the plan mid-trade — only revise through periodic review based on numbers. 4. Start simple; a too-complex plan won't be followed.

5. Worked example

A minimal plan: "Only trade sector-X stocks, daily timeframe. Enter on a bounce from a predefined support. Stop below support. Risk 1%/trade. Minimum RR 1:2. After 3 losses in a row, stop until tomorrow." Short, but enough to give every trade a criterion to check.

6. Common mistakes

  • No plan, entering by mood.
  • A vague plan ("enter when it looks good") — unverifiable.
  • Editing the plan mid-trade by emotion.
  • A plan too complex to follow, so it's abandoned.

7. FAQ

  • Does the plan need to be long? No. It needs to be clear and followable, not long.
  • How often do I revise it? Through periodic reviews (based on journal + numbers), not on a whim.

8. Tools

  • A plan template + pre-trade checklist.

9. Checklist

  • ☐ Do I have a clearly written plan?
  • ☐ Does this trade fit the plan's criteria?
  • ☐ Am I about to edit the plan mid-trade?