What is Trading Plan?
A trading plan is a comprehensive written document that defines your trading strategy, entry and exit criteria, risk management rules, and performance evaluation methods.
Trading Plan Explained
A trading plan is your roadmap for every market situation. It specifies what you trade, when you enter, when you exit (both for winners and losers), how much you risk, and how you evaluate performance. Without a plan, every trade is a guess. The plan removes emotion by turning decisions into rules. The most important part is actually following it.
Real-World Example
Your trading plan states: 'Trade only AAPL and MSFT. Enter on pullback to 20 EMA in uptrend. Risk 1% per trade. Stop loss below the most recent swing low. Take profit at 2:1 reward-risk ratio. Maximum 3 trades per day. Review weekly.'
Related Terms
Build Discipline Around Trading Plan
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