The trading decision loop is the repeating process that runs from a market view to position sizing, to entry, to exit, to review, and then back into the next view. Each step feeds the next, and the review returns into the view, which is what makes it a loop rather than a line.
How it works
The market view produces an idea, sizing sets the risk, the entry rule times it, the exit rule closes it, and the review converts the result into information for the next idea.
Skipping a step does not stop the loop; it runs the rest of it on missing information.
Why it matters
Understanding the loop as a whole connects the separate lessons of a course into one system.
The review is the step that lets the loop improve: without it, the loop runs but never learns.
A simple market example
A trader starts with a market view, sizes the trade from a 1R budget, enters on a specific rule, exits at the planned stop, and reviews the result on the weekend. The review then informs the next week's view.
Common mistakes
Treating a trade as one decision instead of a loop, which leaves the review disconnected from the next idea.
Considering the loop complete without the review feeding back into the next decision.
Frequently asked questions
Is the decision loop the same as a trading plan?
The plan is the written form of the loop's steps; the loop is the process those steps form when they run and feed back.
Which step is most often skipped?
The review, which is the step that lets the loop improve instead of repeat.
How do I know my loop is complete?
Walk a simulated trade through all five steps and check that the review changes the next decision.
Educational content only. Definitions describe common market usage and may vary by jurisdiction, instrument, or institution.