Trading Plan

Context & Mechanics

Definition and purpose

A trading plan shifts decisions out of the emotional moment into calm preparation time: what is traded, when, at what size, with which exits – and when is there no trading? The plan makes trading verifiable: only when rules exist in writing can the journal distinguish whether a loss was a normal statistical case (plan followed, trade lost) or a discipline case (plan broken) – two fundamentally different problems with different solutions.

Components

A complete plan typically comprises six blocks: setups (precise criteria for when an entry is valid – ideally so clear that two people would make the same decision), risk rules (position sizing, risk per trade e.g. 1 % = $1,000 on the $100,000 account, daily limit in R), exit rules (stop-loss logic, targets, management rules such as break-even or trailing stops), trading hours and markets, routines (pre-market preparation, post-session review) and circuit breakers (daily stop after −2R, mandatory pause after losses – the protection against tilt and overtrading).

From plan to statistics

The plan is not a static document but a hypothesis that the journal continuously tests: expectancy per setup shows which rules carry; the rule-break ratio shows where discipline or practicability is lacking. Changes belong in defined review cycles (e.g. monthly, from a sample of 30–50 trades per setup) – not in the running trading day. For prop-firm traders there is more: the plan must reflect the concrete rulebook – daily loss limit, minimum trading days and consistency requirements are translated into dedicated plan rules.

Why it matters for traders

The trading plan is the basis of any serious improvement: without it there is nothing to measure. In the GlanWick journal, plan rules can be mapped as setup and emotion tags, making rule breaks visible – GlanWick is a training and simulation tool and not a prop firm itself.

Execution Example

A trader prepares a two-step challenge ($100,000, daily loss limit 5 %, overall 10 %, phase-1 target 8 %) and translates strategy and rulebook into a written trading plan.

Setups: two defined setups with checklist criteria; everything else is off-limits.
Risk: 1 % per trade ($1,000), daily stop at −2R – the buffer to the 5 % daily limit thus always spans several losing days.
Exits: initial stop 2×ATR, target 2R, break-even stop at +1R – fixed in advance, during the trade there is only execution.
Review: after 20 trading days the journal shows 92 % plan adherence; the +0.375R expectancy matches the planning maths (≈21–22 trades to the 8 % target) – deviations would immediately be separable into discipline or strategy problems.

Execution Risk & Errors

Keeping the plan only in one's head instead of in writing and reinterpreting rules situationally

Defining setups so vaguely that every impulse passes as a setup

Changing the plan mid-trading-day instead of in fixed review cycles

Not translating prop-firm rules (loss limits, minimum trading days) into dedicated plan rules

Never measuring plan adherence and confusing discipline problems with strategy problems

Frequently Asked

What belongs in a trading plan at minimum?

Six blocks: defined setups, risk rules (risk per trade, daily limit), exit rules, trading hours/markets, routines and circuit breakers. In writing – otherwise it is not verifiable.

How often should the plan be adjusted?

In fixed review cycles, e.g. monthly and only from a sufficient sample (30–50 trades per setup) – never mid-trading-day or right after a loss.

How do I tell whether my problem is strategy or discipline?

By the journal split: plan-adherent trades show the quality of the strategy, rule-break trades the discipline. Without a written plan this separation is impossible.

How do I translate prop-firm rules into the plan?

Every rulebook boundary becomes a more conservative plan rule: e.g. a daily stop at −2R long before the 5 % daily limit and position sizes whose normal losing streak does not endanger the overall limit.