The trading plan and the trade journal

A trading plan is a written document setting out what you trade, when, how and in what size. It is not organisational vanity: without a written plan, every decision you make is hostage to your mood at that moment.

What it must contain

1. Instruments — what exactly do you trade? Two or three is enough.
2. Timeframes — one for trend and one for entry.
3. Hours — in which hours you trade and in which you do not.
4. Entry conditions — written so that if someone else read them they would apply them the same way.
5. Stop-loss placement — a clear rule, not an in-the-moment judgement.
6. Target and exit method — full or partial, and is the stop moved?
7. Risk — a fixed percentage, and a maximum number of simultaneous open trades.
8. Shut-down limits — daily, weekly and monthly.
9. What you never do — an explicit list: no trading during news, no doubling after a loss, no trade without a stop.