A rule violation is an execution that did not follow the written trading plan, such as taking a trade without a defined stop, moving a stop after entry, or trading outside the plan. It is a process failure judged independently of the trade's outcome.
How it works
A rule violation is identified by checking the trade against the written rules, not by the P&L. A profitable trade that broke a rule is still a violation.
In a review, violations are logged separately so they do not inflate the strategy's real statistics.
Why it matters
Violations corrupt the review if they are mixed with planned trades, because the combined result includes trades the strategy never would have taken.
A violation that repeats across trades is a fixable process problem; identifying it is the first step to correcting it.
A simple market example
A trader takes a trade on a hunch without a stop or a size. It wins. In the review, the trade is still logged as a rule violation, because the plan was not followed regardless of the profit.
Common mistakes
Forgetting a violation because the trade made money.
Treating an unplanned trade as a new strategy instead of a process failure.
Frequently asked questions
Can a profitable trade be a violation?
Yes. A rule violation is about whether the plan was followed, not whether the trade made money.
How do I stop violating my rules?
Tag trades as planned or unplanned in the moment, and review the gap between the two columns to see the real cost.
Are all violations fixable?
Most are. If a violation repeats, it points at a specific part of the process that can be corrected.
Educational content only. Definitions describe common market usage and may vary by jurisdiction, instrument, or institution.