Trading Plan
A written document that defines your entry criteria, exit rules, position sizing, and daily loss limits before the market opens.
A trading plan is the rulebook you write when you are calm so that it can govern your behaviour when you are not. Without one, every decision is made in real-time under emotional pressure — and emotional decisions in markets are statistically expensive.
A minimum viable plan answers: What is my setup? Where do I enter? Where is my stop? Where is my target? What is my maximum daily loss? What conditions mean I should stop trading for the day?
The plan is not a guarantee of profit. It is a guarantee that your results reflect your edge, not your mood. You cannot improve what you do not define. Without a plan, you cannot even tell whether a bad week was bad luck or bad execution.
Related Terms
Analysis Paralysis
The inability to pull the trigger on a valid setup because you keep analysing, adding indicators, and waiting for more confirmation.
IntermediateConfirmation Bias
The tendency to seek out information that supports a trade idea you already hold and dismiss evidence that contradicts it.
IntermediateConviction
Confidence in a trade idea grounded in evidence and process — distinct from stubbornness, which is confidence without that grounding.
IntermediateDiscipline
The ability to execute your trading plan without deviation, even when emotions scream at you to do something different.
BeginnerDiscipline Slippage
The gradual erosion of trading rules over time — small exceptions that compound into a completely undisciplined approach.
IntermediateEdge
A statistically demonstrable advantage in a specific market setup — the reason your strategy should make money over a large sample.
IntermediateEmotional Trading
Making buy or sell decisions based on how you feel rather than on pre-defined rules and objective market conditions.
BeginnerFlow State
A state of peak performance where trading feels effortless and intuitive — pattern recognition is sharp, execution is clean, and distraction disappears.
IntermediateFOMO
The anxiety that everyone else is profiting while you sit on the sidelines, driving impulsive entries at the worst possible price.
BeginnerGreed
The emotional drive to squeeze every last tick out of a trade, often turning winners into losers by refusing to take profit.
BeginnerPatience
Waiting for your exact setup before pulling the trigger — the skill of doing nothing when conditions are not right.
BeginnerProcess vs Outcome
Evaluating trades by whether you followed your rules — not by whether they made money — because good process produces good outcomes over time.
IntermediateSunk Cost Fallacy
Holding a losing trade because of how much you've already lost in it — as if the market cares what you paid.
BeginnerTrading Journal
A systematic record of every trade with entry rationale, outcome, and emotional state — the most underused tool in most traders' arsenals.
Beginner