Why write it down
Decisions made during a trade are made under pressure. A written plan moves the important decisions to a calm moment before the session, and gives you something to review against afterwards. An assessment's rules are, in effect, a minimum plan written for you; your own plan should sit comfortably inside them.
What a plan covers
| Section | Questions to answer |
|---|---|
| Instruments | Which index or indices will I trade? Only one to start is fine. |
| Session | Which hours will I trade? When will I not trade at all? |
| Setup | What exactly must I see before I consider a trade? |
| Entry | What event triggers the order? |
| Exit | Where is the stop? Where, or how, do I take profit? |
| Sizing | What percentage do I risk per trade? How is quantity calculated? |
| Daily limits | How many trades, and how much loss, before I stop for the day? |
| Review | When do I review my journal, and what do I look for? |
A starting template
Copy this and fill it in with your own rules. The numbers are examples to replace, not recommendations.
- I trade one index, only between the times I have written down.
- I risk no more than 0.5% of my balance per trade, calculated before I enter.
- Every trade has a stop decided before entry. I do not move it further away.
- I stop trading for the day after two losing trades or a 1.5% loss, whichever comes first.
- I do not hold positions overnight until I have 20 journaled intraday trades.
- Every Saturday I review the week's trades against this plan and change at most one rule.
Following it
The plan only helps if you keep to it. Record, for every trade, whether it followed the plan. A losing trade that followed the plan is a cost of doing business. A winning trade that broke it is a habit to be worried about.