Why this market, now
The structural or fundamental read that makes this worth considering.
Writing Your First Trading Plan
A market view, a risk budget, an entry rule, an exit rule, a review process — this is the lesson where everything from the last eight modules gets written down in one document.
- Identify the five components a trading plan needs: market view, risk budget, entry rule, exit rule, and review process.
- Explain why a missing risk budget leaves position size without a repeatable basis.
- Explain why a missing review process removes the ability to learn from outcomes.
- Integrate concepts from earlier modules into a single written plan.
- Distinguish a complete plan from one with a specific missing component.
“Buy if it looks strong” is not yet a trading plan
A trading plan records context, entry trigger, invalidation, exit logic, sizing, and known risks before action so the trade can later be audited.
Quest 47 · Trade Plan
Turn “I want this trade” into a plan that can block impulsive execution
Market, context, entry, invalidation, exit, size, risk, and data provenance are all required. The goal is not a long document; it is a prewritten definition for every material decision.
A critical field is still empty, so the plan cannot move to execution.
A Written Plan Is Where Every Earlier Lesson Meets
A trading plan isn't a new concept — it's the place where a market view, a risk budget, an entry rule, an exit rule, and a review process all get written down together, before a single trade is placed. Writing it down forces each piece to actually be decided in advance, rather than assumed or improvised later.
The sizing formula
The 1R amount and position-sizing method to be applied.
Specific and checkable
Conditions precise enough that anyone could apply them the same way.
Toggle Components Off and See What a Plan Loses
Turn each of the five components on and off and read what capability disappears from a plan without it.
A
Market View
Missing this component: there's no stated reason for being interested in this market right now, beyond a general urge to trade.
B
Risk Budget
Missing this component: position size has no defined, repeatable basis and can drift arbitrarily between trades.
C
Entry Rule
Missing this component: entries can be driven by feel rather than a specific, checkable condition.
D
Exit Rule
Missing this component: exits can be improvised in the moment rather than following a plan set before entry.
E
Review Process
Missing this component: there's no mechanism to learn from the trade's outcome afterward.
A Plan Without a Review Process Can't Learn From Its Own Results
The first four components — market view, risk budget, entry rule, exit rule — get a trade placed and closed. The fifth, a review process, is what turns that single trade into information the next trade can benefit from. Without it, a plan can be followed perfectly and still never improve.
What Does Each Plan Actually Support?
Pick a case and judge what the described trading plan does or does not support.
A
A missing risk budget
A trading plan states an entry rule and an exit rule, but doesn't specify a position-sizing method or a 1R risk amount. Without a defined risk budget, position size has no repeatable basis and can drift between trades.
B
A complete plan
A trading plan integrates a market view, a risk budget, a specific entry rule, a specific exit rule, and a review process. This plan covers the core components needed to execute and later evaluate a trade consistently.
C
No review process
A trader has a rule-based entry and exit but no plan for reviewing trades afterward. Without a review process, there's no mechanism to learn from the trade's outcome and improve over time.
A Written Plan Is a Record of Conditions, Not a Prediction
- 1Record the observationDescribe the simulated context and source without calling it a forecast.
- 2Set the boundaryWrite exposure, invalidation and review conditions before the simulated result is known.
- 3Preserve the revisionIf a condition changes, add a dated revision instead of replacing the original record.
| Record type | Useful purpose | Not evidence of |
|---|---|---|
| Prewritten plan | Makes assumptions and boundaries auditable | A favourable outcome |
| Post-event review | Shows how the process was followed or revised | That the original reasoning was correct |
Fact
Keep the source and time
Save the observation and its stated limits.
Revision
Keep the reason for change
State what evidence changed and what would still falsify the revised plan.
Five Checks for a Complete, Testable Plan
1
Market view
What structural or fundamental read supports considering this market?
2
Risk budget
What is the 1R amount and sizing formula?
3
Entry rule
What specific, checkable condition triggers entry?
4
Exit rule
What specific stop and target or exit condition applies?
5
Review process
How and when will this trade be logged and reviewed?
A Testable Plan Names Conditions, Actions, and Limits
A review process is as essential as market view, risk budget, entry, and exit.
A plan on paper can't quietly skip a component the way an unwritten one can.
Missing any one leaves a specific, identifiable gap.
Put Your Understanding to the Test
Submit your answers to see detailed explanations.
Question 1 of 3
A trading plan states an entry rule and an exit rule but no position-sizing method. What is missing?
Question 2 of 3
Why is a review process considered a core component of a trading plan, not an optional extra?
Question 3 of 3
A plan reads: trade index futures while the daily structure stays directional; enter on a close beyond last week's range; exit at the prior swing low or after ten sessions; risk 1R per trade; log trades Friday and review monthly. A reviewer calls it incomplete. Is the reviewer right?
Stuck? Ask Mira to Break It Down
Share your draft trading plan, and Mira can help you check whether all five components are present and specific enough — it won't write the plan's content for you.
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Put this concept into practice
What does a complete trade plan actually need?
Break a complete trade plan into three groups: entry/invalidation (setup, entry/trigger, and the invalidation condition set before entry), risk/size (a risk budget and the position size derived from that budget and the stop distance), and exit/execution (exit logic and how it's executed). Make clear that an exit plan doesn't require a fixed take-profit price — trailing, partial exits, time-based, and rule-triggered exits are equally valid.
A new trade isn't just 'is this good?' — it's also 'how does it fit into the portfolio?'
Merge the trade plan with portfolio context: a trade that's attractive and rule-compliant on its own can still raise portfolio concentration; a new position consumes portfolio heat/risk budget, so you need to check whether the combined total still fits within budget before entering; portfolio fit is part of the entry decision — it means consciously deciding whether to accept extra concentration risk, not 'concentration means you can't trade.'