What It Is
A trading plan is a complete written document that defines every aspect of your trading: what markets you trade, what setups you take, how you size positions, how you manage risk, and what rules you follow. It's your business plan.
Key insight: Trading without a plan is like driving without a map. You might get somewhere, but probably not where you want to be. The plan eliminates real-time decision-making under pressure — the state where most traders make their worst choices.
A good trading plan is specific enough to follow mechanically. If two traders with the same plan look at the same chart, they should reach the same conclusion. If your plan leaves room for 'maybe' or 'I feel like,' it's not specific enough.
Building Your Plan
Markets traded, timeframes used, specific setups (with examples), entry rules, stop-loss rules, take-profit rules, position sizing rules, maximum daily/weekly risk limits, and schedule.
Paper trade or use small size to validate your plan over at least 50 trades before trading it with real capital. Adjust what isn't working based on data, not feelings.
Markets evolve and so should your plan. But change it based on journal data, not emotions. If your win rate drops over 30+ trades, investigate. If you had two bad days, that's normal variance.
Apply this concept in combination with others. No single concept tells the whole story - confluence is key.
Continue through core concepts
Compare this reference with related structures and readings before applying it to a live chart.