A simple risk plan

Summary

Write your rules down before you trade: the most you risk on one idea, the most you risk in one day, where stops go, and what makes you stop for the day. A written plan takes decisions away from the moment, when fear and excitement are strongest. Review it every month and change it only when you are calm, not in the middle of a trade.

Key points

• Write down: risk per idea, risk per day, stop rules, when to stop.
• A written plan removes decisions from emotional moments.
• Change the plan when calm, never mid-trade.

Check yourself

When is the best time to change your risk plan?

Practice