The more complex a trading plan is, the easier it is to freeze at the moment of decision — either because there are too many items to look at, or conflicting fields leave you unsure which one to follow. Stripping the plan down to 5 essential fields, each solving a single decision problem, is the key to making it truly "usable."
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Here are the 5 fields with standards for filling them out and execution methods.
Step 1: Field 1 – Entry Condition — Solving "when to enter"
This is the only field in the plan that involves analysis. It's not about writing a lengthy analysis report; it's about specifying the single signal that triggers your entry.
What to do: Describe the specific conditions that trigger your entry in one sentence.
How to do it:
The condition must meet the following criteria: quantifiable, observable, and unique.
Not recommended: "Buy after the market stabilizes."
Recommended: "Price breaks the previous high and closes above that level."
Case A (technically driven): Write down specific indicator values or candlestick patterns. Example: "MACD golden cross + price above the 20-day moving average."
Case B (fundamental/event-driven): Write down the specific data release or event. Example: "CPI lower than expected and BTC up more than 1% within 5 minutes."
How to know it's done: After filling out this field, anyone (including yourself) can clearly determine "the signal has appeared" or "the signal has not appeared" when the market reaches that point, without any ambiguity.
Step 2: Field 2 – Entry Price and Position Size — Solving "how much to enter"
This is the field that determines your loss per trade. Entry price and position size must be calculated together, not filled in separately.
What to do: Record the entry price and the corresponding position quantity/amount.
How to do it:
Entry price: Clearly specify whether it's a limit order or market order. If using a limit order, write down the limit price; if using a market order, write "enter at market price."
Position size: Don't write "10% position"; write the exact amount and quantity. Example: "Buy with 1000 USDT, approximately 0.016 BTC."
Prerequisite: The position size should be calculated based on the next field (stop-loss price). First calculate the stop distance, then back-calculate the position size.
How to know it's done: The data on your positions page matches this field — entry price and quantity are consistent with the plan.
Step 3: Field 3 – Stop-Loss Price — Solving "when to admit you're wrong"
This is the most important field in the entire plan. A plan without a stop-loss price is like having no plan at all.
What to do: Write down the specific price that triggers the stop-loss.
How to do it:
Like the entry condition, the stop-loss price must be a quantifiable specific price. Example: "Close position if price drops below X."
Set it based on technical levels (such as previous lows, moving averages, ATR-based support levels), not by back-calculating from a loss amount. Using a dollar loss to determine the stop price often places the stop at an unreasonable level.
Once set, place the stop-loss order immediately upon entering the trade. Leading trading platforms also emphasize that stop-loss and take-profit levels must be at "specific levels" as part of recommended trading plan elements.
How to know it's done: There is an active stop-loss order on your trading platform, with a trigger price matching your plan.
Step 4: Field 4 – Take-Profit Price — Solving "when to get out"
With a clear take-profit, you won't be trapped by the thought of "holding a little longer."
What to do: Write down the specific price or condition that triggers the take-profit.
How to do it:
Case A (price target): Specify the exact exit price. Example: "Close position when price reaches X."
Case B (scaling out): If planning to exit in batches, write down the exit price and corresponding proportion for each batch. Example: "Close 1/3 at X, close the rest at the next target."
Case C (trailing stop): Write down the trailing rules. Example: "After profit exceeds 5%, exit on a 2% pullback."
How to know it's done: The take-profit conditions are so clear that no on-the-spot judgment is needed. If Case B or C is more complex, combine the platform's conditional order features to achieve partial automation.
Step 5: Field 5 – Plan Validity Period — Solving "when this trade becomes invalid"
This is the most easily overlooked field. A plan without a time limit can become an excuse to "hold indefinitely."
What to do: Specify the time window during which this plan is valid.
How to do it:
Case A (intraday plan): If the entry condition is not triggered within the day, the plan is void, and you reassess the next day.
Case B (swing plan): Write the validity period. Example: "Valid this week, void if not triggered by Friday's close."
Case C (event-driven): Write the expiry time after the event. Example: "Void if not triggered within 2 hours after the data release."
How to know it's done: You know after what point in time this trade is no longer a "planned" operation.
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How to Confirm You're Doing It Right?
Fill in the above 5 fields and store them in a document or notebook. Before placing an order, check each of the 5 fields:
Is the entry condition met?
Have you filled in the entry price and position size?
Is the stop-loss order placed? (This step requires physical verification — open your platform's order page to confirm.)
Is the take-profit price set?
Is this plan still within its validity period?
If all 5 answers are "yes", execute. If any answer is "no", do not execute — not "I'll fix it later", but do not execute.
