How to write a trading plan that survives a bad week

A trading plan is the set of decisions you make while calm so that you do not have to make them while a position is moving against you. It fits on one page. If it runs to twelve, you have written a document you will never open, and the whole value of a plan is that you read it when it is inconvenient.

The test of a plan is not how comprehensive it looks. It is whether it answers, without ambiguity, the question you will actually face on a bad Thursday: what do I do now?

Why one page?

Every rule you add makes the plan less likely to be followed. A long plan cannot be held in your head, so it gets consulted less, so it drifts out of use, and you end up improvising while believing you have a system.

The other reason is that a long plan is usually a sign of unresolved thinking. Ten conditions for an entry generally means you have not decided which two matter.

What belongs on the page?

1. What you trade. Which instruments, on which time frame. Not “stocks”, but the actual universe, and why those. The watchlist logic is in how to build a watchlist you will actually use.

2. Your setup, stated so a stranger could apply it. The exact conditions. If the words “strong”, “clean”, or “looks good” appear, rewrite until they do not.

3. Your entry. The trigger and the order type. Whether you enter on a close, on a level being touched, or on a stop order above a high.

4. Your stop. Where it goes and what it is measured from. See where to place a stop loss.

5. Your exit. Target, trailing rule, or both. Include the condition that ends a trade when the thesis breaks without the stop being hit, which is covered in how long should you hold a swing trade.

6. Your risk. Per trade, per correlated cluster, and total open. Three numbers. See position sizing and how many trades at once.

7. Your minimum risk to reward. The ratio below which you do not take the trade regardless of how much you like it. See the risk to reward ratio.

8. Your routine. When you analyse, when you place orders, when you review. With actual days and times, because a routine without a slot in the week is an intention.

9. Your stop-trading conditions. The monthly loss that triggers a review, the level at which you cut size, and the point at which you stop entirely. This is the section people leave out and the one that prevents the worst outcomes.

10. What you will not do. A short list of your own specific failure modes. Mine includes not moving a stop away from price and not adding to a losing position. Yours should be built from your own record, not from a generic list.

The section that does the most work

Number ten. Everything above it describes the strategy. Number ten describes you, and the plan only fails at the points where you fail.

The way to write it is to go through your journal, find the trades that broke the rules, and look for the repeated shape. Almost everyone has two or three recurring errors rather than a wide scattering. Write those down as explicit prohibitions in your own words. A rule that names your specific weakness has far more force than a general principle you agree with abstractly.

If you have no journal yet, this section will be guesswork. Come back and rewrite it after fifty trades. The case for logging is in why your trading journal beats your next strategy.

Write the pressure moments in advance

The plan’s real job is to have already answered the questions that arrive when you are least equipped to answer them. Write literal responses to:

• Price is approaching my stop and I want to move it. Answer: no. Stops move towards profit only.
• I have lost four in a row and want to skip the next setup. Answer: take it, at normal size, if it meets the criteria.
• I have lost four in a row and want to double the next one. Answer: no. Size never increases to recover.
• A great setup appeared but I am already at my exposure limit. Answer: skip it, or close a weaker position, never both trades.
• Something is running and has passed my target. Answer: apply the trailing rule, do not improvise a new target.
• I have no setups this week. Answer: take none. A flat week is a normal outcome, not a failure.

Reading your own handwriting at the moment of temptation is a surprisingly strong intervention. It converts an argument with yourself into a decision that has already been made by someone with better judgement, which is you, last month, calmly.

Reviewing the plan without abandoning it

A plan you can change at any moment is not a plan. A plan you can never change is a superstition. The resolution is to set the review in advance: a fixed schedule, and a rule that changes take effect only at the review, never mid-week and never during a drawdown.

I review monthly, look at whether I followed the plan before whether it made money, and only consider changing the strategy itself on the schedule and evidence described in when to change your trading strategy.

Where people go wrong

Writing it once and never opening it. Print it. Keep it where you do your analysis. Read the pressure-moment answers when you are in a pressure moment.

Copying someone else’s. A plan built around a routine you cannot follow, on instruments you do not understand, will not survive its first bad week. Mine works for me partly because it was built around the constraint of a full-time job.

Confusing a plan with a prediction. The plan does not say what the market will do. It says what you will do.

Leaving out the stop-trading conditions. Optimism is not a plan.

The full one-page template I use is in The 9-to-5 Trader.

Educational only, not financial advice. Trading carries a real risk of loss.