Trading Plan Basics: Entries, Exits, Risk, and Review

A trading plan is a written set of rules that guides what you trade, when you enter and exit, how much you risk, and how you review results. Clear rules reduce hesitation and make performance measurable.

1) Define your market, timeframe, and sessions

Pick one market and one timeframe to start (for example, a liquid stock on the 5-minute or daily chart). Decide which sessions you will trade and when you will stop for the day. Constraints help you avoid chasing random opportunities.

• Instruments: list 3–5 symbols you know well.
• Timeframes: one primary, one higher timeframe for context.
• Sessions: start/stop times and max trades per session or day.

2) Entries: setups and triggers

A setup is the condition that makes a trade idea valid (e.g., trend pullback or range breakout). A trigger is the precise event that gets you in (e.g., break of the last swing high or a close above a level).

• Trend pullback long: price makes higher highs and higher lows, then pulls back to prior support. Trigger: break above the pullback’s high.
• Range breakout: price consolidates in a clear box. Trigger: clean break and close beyond the range boundary.

Add simple filters to avoid weak trades, such as “no entry within 5 minutes of major news” or “skip trades into obvious nearby resistance.” Keep rules short so they’re easy to follow live.

3) Exits and risk rules

A stop-loss is a pre-set exit that caps a loss if the trade is wrong. A target is a pre-planned profit-taking level (for example, the next resistance). Risk per trade is the dollar amount you’re willing to lose if the stop is hit. Position sizing is how many shares/contracts you take so the loss at your stop equals your risk per trade.

Simple example: you buy at 100 with a stop at 98. Your risk per share is 2. If you risk $100 per trade, you can take 50 shares so a full stop equals $100.

• Set stops where your trade idea is invalidated (e.g., below the pullback low for a long).
• Choose one exit method and stick to it for a sample size of trades: fixed target at the next level, or a trailing stop under each new higher low.
• Daily risk guardrails: a max daily loss and a max number of trades. Stop trading if either is hit.

Keep language specific: “Enter on break of 1-minute pullback high, stop 1 tick below the pullback low, target at prior session high.” Specificity prevents improvisation.

4) Review and continuous improvement

Journaling is recording each trade’s plan and outcome so you can learn from patterns. Track setup, entry, stop, target, size, result, and a short note on execution quality. Save a marked-up screenshot.

• Daily: tag A/B/C quality, note any rule breaks, and log reasons.
• Weekly: measure win rate, average gain vs average loss, and top 3 recurring mistakes.
• Refine: if a rule underperforms, change one variable at a time and test again.

Pre-trade checklist (print it):

• Is the setup present? Yes/No
• Is the trigger clear? Yes/No
• Stop location and dollar risk confirmed? Yes/No
• Any nearby level that invalidates the idea? Yes/No
• Daily risk within limits? Yes/No

Practice your plan on historical charts to build reps quickly and without real risk. For ideas on structuring safe practice, see How to Practice Trading Without Risk.

Ready to pressure-test your plan? ChartingPark lets you practice on accelerated historical charts with TradingView visuals, so you can refine entries, exits, and risk rules faster. Try it at app.chartingpark.com.