Writing a trading plan you will actually follow

A plan written in calm conditions is the only reliable defence against decisions made in stressful ones. The plan need not be long. It must be specific.

The four questions

• What conditions must be true before you enter?
• How much will you risk, in dollars, if you are wrong?
• What price or event tells you that you are wrong?
• What price or event tells you that you were right, and the position is finished?

Review cadence

Review the plan against the record, not against memory. Keep a written log of every decision and its outcome, including the ones you would rather forget.