What is a trading plan and why include specific order rules?

Specific order rules remove guesswork and protect your account. They define:

- Entry rules: Exact conditions for buying or selling (e.g., “Buy only if price breaks above resistance + RSI > 50 + bullish candlestick confirmation”).

- Stop-loss rules: Always set a hard stop at a specific level (e.g., “Stop-loss = 1% below recent swing low or 20 pips, whichever comes first”).

- Take-profit rules: Clear profit targets (e.g., “Take profit at 2:1 reward-to-risk or next major resistance”).

- Position sizing: Never risk more than X% of your account per trade.

Key reasons for these rules:

- They enforce discipline you follow the plan, not feelings.

- They control risk so one bad trade doesn’t wipe you out.

- They turn trading into a repeatable process instead of random decisions.

- They help you review performance objectively and improve over time.

Please whats the difference between a trading plan and a trading strategy?

A trading strategy is your specific method for entering and exiting trades (e.g., moving average crossover, breakout setup, or specific indicators).

A trading plan is the complete blueprint, it includes your strategy + risk rules, position sizing, daily routine, psychology guidelines, and how you manage losses/profits overall.

Think of the strategy as the "how you trade" and the plan as the "how you run your trading business."

Strategy has to do with what you see before you enter/exit a trade etc. while a trading plan has to do with stuff like what you do after taking a loss, etc.

That's a solid distinction.

Strategy = your market analysis and rules for entries, exits, and setups.

Trading plan = the full system, including risk limits, loss recovery rules, position sizing, and routines after wins/losses.

Both are essential, strategy without plan leads to inconsistency.

My plan was that if I made up to $10 today I would close the trade, withdraw the profit and go for a pork sandwich 😂and boy did it taste good! Sounds like a plan to me

A trading plan answers the what if question. It takes care of blindspots in decision making.