Risk & Trade Planning

A useful plan is short but specific. It names the instrument, date and session; states the context and location; defines the entry trigger, invalidation, target and management; calculates size; and lists reasons to pass. Include costs, event restrictions and the remaining session loss room.

Keep the initial plan beside the final record. Log expected versus actual fills, fees, any deviation from the rules and the outcome in dollars and R. Review whether the rule was followed before judging the result. A loss can follow a well-executed plan, and an undisciplined entry can get lucky.

Use a consistent review sample that includes losses, missed entries and passes. Do not delete awkward cases. When changing a rule, date the change and start a new sample so the earlier record stays interpretable.

Worked example

A hypothetical worksheet states: long only after a close above 104 and a successful retest; entry 104.50; stop 102.50; target 108.50; $1 per point per unit; $0.50 estimated cost per unit; $20 budget. Estimated risk is $2.50 per unit, permitting eight units. Gross target distance is 2R; net outcomes depend on fills and costs.

Try it in replay

Complete that worksheet for a short with entry 104, stop 107 and target 98, keeping the same unit value, cost estimate and budget. Add one explicit pass condition.

Check your reasoning

Estimated risk is $3.50 per unit; five units fit the budget at $17.50. The gross target is 6 points, or 2R. A valid pass condition could be “no entry if the trigger occurs during the excluded event window.” Next: Price Action & Setups.