Every trade begins with a plan.
A strong stock and a good entry are only part of the process. Before taking a position, we define the trade: where to enter, how much to buy, where the idea is invalidated, and how the position will be managed if the trade works.
The goal is simple: remove as much emotion and guesswork from the decision-making process as possible.
From Ready to Trade
A stock on the Ready List has earned our attention. A Trade Plan answers the next question:
If the opportunity becomes actionable, exactly what is our plan?
A complete Trade Plan defines the key decisions before capital is committed.
The Four Parts of a Trade Plan
01 — Entry
Where the trade becomes actionable.
We define the conditions that must be met before entering a position. A strong company alone is not enough. The technical setup, market environment, and timing must align.
02 — Position Size
How much capital to commit.
Not every opportunity deserves the same allocation. Position size reflects the quality of the setup, the level of conviction, the market environment, and the amount of risk involved.
03 — Risk Management
Know what happens if the trade is wrong.
Every trade has a predefined level where the original thesis is no longer valid. Risk is considered before entering the position—not after the stock moves against us.
04 — Trade Management
Have a plan for success, too.
A Trade Plan does not end once the position is established. As a stock moves, we evaluate whether to hold, add, reduce, or exit based on the original plan and changing market conditions.
A Plan Before the Position
The purpose of a Trade Plan is not to predict exactly what a stock will do.
It is to define our decisions before emotion, fear, or excitement can influence them.
We know what we're looking for before entry. We know the level that would invalidate the trade. And we have a framework for managing the position if the stock moves in our favor.
The goal is not to be right on every trade. The goal is to approach every opportunity with a clear plan and manage risk systematically.
From Trade Plan to Current Position
Once a Trade Plan becomes actionable and a position is established, the focus shifts from preparation to management.
The original plan provides the framework, but the position must continue to be evaluated as the stock, the broader market, and the original thesis evolve.
A Trade Plan tells us what we intend to do. Current Positions show how the trade is being managed.