A trading plan is the difference between trading and gambling. It's a written set of rules that decides what you trade, when, how much, and when you walk away — before money and emotion are on the line.
Why you need one
In the moment, fear and greed are loud. A plan written in calm conditions is your defence against decisions made in panic or euphoria. Without one, every trade is improvised — and improvisation is expensive.
What a trading plan includes
- What you trade — which markets and instruments, and which you avoid.
- Your setup — the specific conditions that make a trade valid. If they're not all present, you don't trade.
- Risk per trade — a small, fixed percentage, every time. See position sizing.
- Entry, stop and target — defined before entering, with a minimum risk/reward.
- Daily limits — a maximum loss (and maybe a maximum number of trades) after which you stop for the day.
- Routine — when you trade, when you review, and your journal habit.
The hard part
Writing the plan is easy. Following it is the whole game. Most blown accounts come from a trader who had a plan and abandoned it after a couple of losses — chasing, revenge trading, over-sizing.
Keep it simple
A one-page plan you actually follow beats a complex one you ignore. Review and refine it with evidence from your journal, not from a single bad day.
A trading plan turns "I think it'll go up" into a repeatable process. The process is the edge — not the prediction.
Education only — not financial advice.