Trading Plans and Rules — Developing a Trading Process

Strategy vs. plan

A strategy tells you how to find and take trades. A trading plan is broader: it covers your goals, the markets and sessions you trade, your risk limits, your daily routine, and the rules for when you stop trading.

You can think of the strategy as one section inside the larger trading plan, the way a single recipe is part of a restaurant's full operating manual.

[Read the lesson: Trading Plans and Rules](/learn-to-trade/developing-a-trading-process/trading-plans-and-rules)

What a complete plan includes

A solid trading plan typically covers: trading goals and timeframe for review, markets/instruments and sessions traded, the strategy's entry/exit rules, position sizing and maximum risk per trade, a daily and weekly loss limit, and a routine for journaling and review.

The loss limits matter as much as the entry rules. Many traders have workable entry rules but no rule for when to stop trading for the day — which is often where the real damage happens.

[Read the lesson: Trading Plans and Rules](/learn-to-trade/developing-a-trading-process/trading-plans-and-rules)

Why writing it down changes behavior

A plan that exists only in your head is easy to bend in the moment, because stress and excitement change what feels reasonable. A written plan gives you a fixed reference to check your actions against, before and after a trade.

Reviewing the plan after losses is especially useful: did you break a written rule, or did the rule itself fail? These require very different fixes.

**Rule violation vs. rule failure:** If your plan says 'risk 1% per trade' and you risked 3% on a trade that lost, that's a rule violation — the fix is discipline. If you followed every rule exactly and the strategy still underperformed over 100 trades, that's a rule failure — the fix is revising the strategy.

[Read the lesson: Trading Plans and Rules](/learn-to-trade/developing-a-trading-process/trading-plans-and-rules)

Keeping the plan alive

A trading plan isn't static. It should be reviewed on a schedule (for example, every 50 or 100 trades) and updated based on journal data, not based on how one or two recent trades felt.

Changing rules mid-session because of a losing streak defeats the purpose of having a plan at all — changes belong in scheduled reviews, not in the heat of the moment.

[Read the lesson: Trading Plans and Rules](/learn-to-trade/developing-a-trading-process/trading-plans-and-rules)