Building a trading plan

Every lesson in Seat Holder has said “follow your plan.” Now you write it. A trading plan is a one-page document that answers, in advance, the questions your feelings would otherwise answer for you in the moment. If it does not fit on one page, it is too long to follow under pressure.

Why write it down

A plan in your head changes with your mood. A plan on paper does not. FINRA’s investor guidance notes that a disciplined, rules-based approach helps people avoid emotional reactions such as fear of missing out and panic, and avoid impulse decisions. A written plan is how a trader brings that discipline to every session. It also gives your journal (Lesson 8) something to measure against: “did I follow the plan?” only makes sense if the plan exists.

Before you start: is this money you can afford to lose?

NFA’s guidance for people considering futures says to trade only with risk capital: money you can afford to lose, over and above what you need for necessities, emergencies, savings, and long-term goals. It also reminds people that leverage can make losses larger than expected. Put the amount of your trading capital at the top of your plan, and make sure it meets that test.

The one-page template

Copy this structure and fill in every line in your own words.

1. Markets

• Which contracts do I trade? (Example: MES only.)
• Which contract month? (Runner Lesson 9 covers rollover.)

Fewer is better. One market you know well beats four you half know.

2. Hours

• My trading window, in CT. (Example format: from ___ to ___ CT.)
• Times I will not trade, such as around scheduled news (Floor Trader Lesson 13).
• My hard stop time for the day.

3. My setups

This section is yours. LearnToTick teaches fundamentals and does not provide setups or strategies. For each of your own setups, write:

• Name of the setup.
• Conditions: what must be true for a trade, described clearly enough that someone else could look at a chart and agree whether it qualifies.
• Entry: how you get in.
• Where the idea is wrong: where your stop goes and why (Local Lesson 3).
• Exit plan for a winner.

If a trade does not match a setup on this list, you do not take it (Lesson 4).

4. Risk rules

Paste in the risk plan you wrote in Local Lesson 14. At minimum:

• Risk per trade, in dollars (Local Lesson 2).
• How you calculate size from stop distance (Local Lesson 4).
• Daily loss limit and maximum trades per day (Local Lesson 7).
• Rules for overnight and news risk (Local Lesson 10).
• Your scaling rule: what must be true before size goes up (Local Lesson 9).
• Streak rules: for example, a break after a set number of losses in a row, and no size increases during a losing day (Lessons 3, 6, and 7).

5. Routine

A short version of your daily routine from Lesson 11:

• Pre-market checklist, including the “am I fit to trade?” check.
• During-session rules (bracket on every entry, journal each trade).
• Post-market checklist.
• Weekly review day and time (Lesson 9).

6. Changes log

A few lines at the bottom: date, what changed, and why. This keeps you honest about when and why the plan evolved.

Rules for the plan itself

• Only change it during your weekly review, in writing, and record the change in the log. Never change it during a session or with a trade open (Lesson 5).
• Change one thing at a time (Lesson 9).
• Read it before every session (Lesson 11).
• Keep it specific. “Be patient” is a wish. “Maximum 3 trades per day” is a rule. (That number is just an example of a specific rule; you set your own.)

Key ideas

• A trading plan fits on one page: markets, hours, your setups, risk rules, routine, plus a changes log.
• Trade only with risk capital, money you can afford to lose, as NFA advises.
• The setups section is your own; LearnToTick does not provide setups.
• Your Local risk plan becomes the risk rules section.
• Change the plan only in the weekly review, one change at a time, in writing.