The trader risk plan

Writing the trading plan

4 min

Everything so far becomes useful only when it is written down before the market is open and your money is on the line. A trading plan is the document that decides your actions in advance, so that in the moment you execute rather than improvise.

What a risk-focused plan contains

  • Risk per trade — your fixed percentage (e.g. 1%), no exceptions.
  • Maximum portfolio risk — total risk allowed across all open positions at once (e.g. 5%), accounting for correlation.
  • Daily / weekly loss limit — a drawdown at which you stop trading for the day or week and walk away. This is the circuit breaker against tilt.
  • Position-sizing method — the exact formula from chapter 3, so size is never improvised.
  • Stop and target rules — where stops go, the minimum reward-to-risk you accept.
  • What you trade and when — the markets, sessions and setups you take, and which you ignore.

A sample skeleton

Risk per trade:        1% of equity
Max open risk:         5% of equity total
Daily stop:            stop trading after -3% on the day
Minimum reward-risk:   2 : 1
Markets:               EUR/USD, GBP/USD, US large caps
Sessions:              London-New York overlap only

Why the plan is a risk tool

Most account-destroying losses are not bad analysis — they are rule-breaking under emotion: doubling down to recover, removing a stop, sizing up after a win. A written plan is the defence, because it lets the calm, rational version of you bind the future, stressed, emotional version. The discipline to follow it is the subject of the final lesson, and it is covered in depth in the Trading Psychology track.

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Risk disclaimer

This content is for educational and informational purposes only and is not investment, financial, tax or legal advice. Trading and investing carry risk, including the possible loss of capital. Any performance shown by third-party tools is hypothetical and not a promise of future results. Do your own research and consider professional advice before making any decision.