Every trader says they have a plan. Very few have one written down. Fewer still follow it consistently.
A plan that exists only in your head is not a plan. It’s a preference. Preferences change when the market moves against you, when you’re tired, when you’ve had a winning week and you feel invincible, or when you’ve had a losing week and you feel desperate.
A written plan doesn’t change. That’s the entire point.
What a written trading plan actually contains
The structure I use covers six areas. Each one is answered specifically — not in generalities.
1. The universe What do I trade? I don’t trade everything. I have a defined list of underlyings I follow consistently. I understand their behavior, their typical volatility, their earnings cycles. Trading something unfamiliar because it’s moving is a mistake I made early and don’t repeat.
2. The setup What specific conditions need to be present before I enter a trade? This is the thesis. It needs to be specific enough that someone else could look at the same chart and the same data and make the same call.
“Looks good” is not a setup. A defined setup has conditions you can check off a list.
3. Entry rules When specifically do I enter? What price, what time of day, what conditions? I don’t enter in the first 30 minutes of market open as a rule. Volatility in that window creates noise that has burned me enough times that it’s now a hard rule.
4. Position sizing Fixed percentage of total capital. Non-negotiable. Doesn’t change based on conviction level, recent performance, or anything else. Sizing discipline is where most accounts blow up.
5. Exit rules — both directions Where do I take profit? Where do I cut the loss? Both numbers are decided before the trade is placed, not while I’m watching it move. Changing exit rules mid-trade is almost always emotional, not analytical.
6. Review process Every trade gets logged. Entry, exit, result, and — most importantly — whether I followed the plan. A losing trade that followed the plan is acceptable. A winning trade that violated the plan is still a problem, because it rewards undisciplined behavior.
How to start
Write it down. One page minimum. Answer each of the six areas above specifically. Then trade it for 30 days without modifying it.
At the end of 30 days, review the log. Look at where you deviated and what the result was. Most people find that their worst results came from the moments they went off-plan.
The plan is not the ceiling. It’s the floor. You build from it, but you start with it.