DEFINE YOUR PROCESS
Build a trading plan that can survive the next decision.
A trading plan is a decision contract written before market pressure arrives. It states what you trade, what must be true, how much may be lost, what invalidates the setup and what must be recorded afterward.
Before you begin
Learning objectives
- Explain: Write the decision before the outcome
- Explain: Use a short pre-trade gate
- Explain: Define exceptions before they occur
Write the decision before the outcome
Define the market, session, setup, permitted direction, maximum risk and rejection condition before entry. A product state can supply research context, but it does not replace these decisions.
Use a short pre-trade gate
A checklist should stop a trade when any required condition is unknown.
- Supported symbol, chart and session confirmed
- Entry, invalidation and exit logic written
- Position size calculated from a fixed risk budget
- Costs, liquidity and scheduled-event constraints checked
Define exceptions before they occur
Write how to respond to a missed entry, partial fill, alert failure, platform interruption or price gap. If the plan has no rule for the situation, the default action is not to improvise a larger risk.
Common mistakes
- Reading the result without the stated scope and assumptions.
- Changing the rule after seeing an outcome while still calling the data unseen evidence.
Trader Checklist
- Supported symbol, chart and session confirmed
- Entry, invalidation and exit logic written
- Position size calculated from a fixed risk budget
- Costs, liquidity and scheduled-event constraints checked
Practice exercise
Choose one of your own trading examples and write one page of rules, evidence and stopping conditions using the principles in "Build a trading plan that can survive the next decision.".
What evidence would overturn the conclusion
The conclusion should be overturned or narrowed if a key assumption cannot be reproduced inside the supported scope, the control cannot be executed, or new out-of-sample evidence repeatedly contradicts it.