| name | trading-plan-generator |
| description | Generate comprehensive trading plans with risk management, position sizing, entry/exit strategies, and performance tracking to trade with discipline and consistency. |
Trading Plan Generator
A comprehensive skill for creating disciplined, rule-based trading plans that help you manage risk, control emotions, and trade consistently.
What This Skill Does
Helps you create professional trading plans for:
- Day Trading - Intraday positions, quick scalps
- Swing Trading - Multi-day to multi-week positions
- Position Trading - Long-term trend following
- Options Trading - Directional and income strategies
- Investing - Long-term portfolio management
Why You Need a Trading Plan
Without a plan:
- Emotional, impulsive decisions
- Inconsistent position sizing
- No clear entry/exit rules
- Revenge trading after losses
- Account blowup risk
- Can't identify what works
With a plan:
- Disciplined, rule-based trading
- Consistent risk management
- Clear decision framework
- Emotional control
- Long-term profitability
- Measurable improvement
The Stats:
- 90% of traders fail (most have no plan)
- Professional traders ALL have written plans
- Plan + discipline = edge
Core Components of a Trading Plan
1. Trading Goals & Mindset
- Financial goals (realistic)
- Time commitment
- Risk tolerance
- Trading philosophy
- Success definition
2. Risk Management (MOST IMPORTANT)
- Maximum risk per trade (1-2% recommended)
- Maximum daily loss limit
- Maximum drawdown tolerance
- Position sizing rules
- Stop-loss requirements
- Risk/reward minimums
3. Market Selection
- What markets you trade (stocks, forex, crypto, options)
- Liquidity requirements
- Price range preferences
- Sector focus (if any)
- What you DON'T trade
4. Trading Setup Criteria
- Entry signals (technical/fundamental)
- Confirmation requirements
- Timeframes used
- Pattern recognition
- Market condition filters
5. Entry Rules
- Exact entry triggers
- Order types (market, limit, stop)
- Position sizing calculation
- Scaling in (if allowed)
- Time-of-day restrictions
6. Exit Rules
- Stop-loss placement (hard rules)
- Take-profit targets
- Trailing stop strategies
- Time-based exits
- Scaling out rules
- Break-even stops
7. Trade Management
- When to adjust stops
- When to add to position
- When to reduce size
- When to exit early
- Never scenarios (what you never do)
8. Psychology & Discipline
- Pre-market routine
- Emotional state check
- Tilt recognition
- Break requirements
- End-of-day review
- Accountability measures
9. Performance Tracking
- Trade journal requirements
- Metrics to track
- Review frequency
- Improvement process
- Strategy adjustment criteria
Risk Management Frameworks
The 1% Rule (Recommended for Most Traders)
Never risk more than 1% of account on single trade
Example:
- Account size: $50,000
- Maximum risk per trade: $500 (1%)
- Stock entry: $100
- Stop-loss: $98
- Risk per share: $2
- Position size: $500 / $2 = 250 shares
- Total position: $25,000 (50% of account)
- Actual risk: $500 (1% of account)
Benefits:
- Can survive 20+ consecutive losses
- Removes emotion from sizing
- Consistent risk across trades
- Protects capital
The 2R Minimum Rule
Only take trades with 2:1 reward-to-risk or better
Example:
- Entry: $100
- Stop: $98 (risk = $2)
- Target: $104 (reward = $4)
- R:R = 2:1 ✅
Why it matters:
- Can be profitable with 40% win rate
- Forces selective trading
- Improves overall edge
Maximum Drawdown Limit
Hard stop trading if down X% from peak
Recommendations:
- Conservative: 10% drawdown → stop trading
- Moderate: 15% drawdown → stop trading
- Aggressive: 20% drawdown → stop trading
When hit:
- Stop trading immediately
- Review all trades
- Identify mistakes
- Paper trade until recovered mentally
- Resume with reduced size
Trading Styles
Day Trading
Definition: Open and close all positions same day
Characteristics:
- Multiple trades per day
- No overnight risk
- Pattern Day Trader rules ($25K minimum)
- High screen time requirement
- Quick decisions
Best for:
- Full-time traders
- High risk tolerance
- Quick decision makers
- Pattern recognition skills
Key rules:
- Never hold overnight
- Reduce size near close
- Stop trading after daily loss limit
- First 30 min often volatile
Swing Trading
Definition: Hold positions 2-10 days
Characteristics:
- 2-5 trades per week
- Overnight risk acceptable
- Part-time friendly
- Technical + fundamental mix
Best for:
- Part-time traders
- Day job professionals
- Trend followers
- Patient traders
Key rules:
- Always use stop-losses
- Check positions before/after market
- Respect earnings dates
- Weekend gap risk consideration
Position Trading
Definition: Hold positions weeks to months
Characteristics:
- Long-term trend following
- Fundamental focus
- Low trade frequency
- Larger position sizes
Best for:
- Investors with edge
- Low time availability
- Fundamental analysts
- Macro trend followers
Key rules:
- Wide stops (volatility-based)
- Focus on major trends
- Ignore daily noise
- Strong thesis required
Entry Strategies
Technical Entry Methods
1. Breakout Entry
- Price breaks above resistance
- Increased volume confirmation
- Wait for pullback or buy breakout
- Stop below breakout level
2. Pullback Entry
- Wait for trend pullback
- Enter at support/moving average
- Continuation confirmation
- Stop below support
3. Reversal Entry
- Identify overextended move
- Look for reversal signals
- Multiple confirmations required
- Wider stops needed
4. Pattern Completion
- Specific pattern (flag, triangle, etc.)
- Pattern completion signal
- Volume confirmation
- Target based on pattern
Fundamental Entry Triggers
For Stocks:
- Earnings surprise
- Guidance raise
- Product launch
- Sector rotation
- Insider buying
- Short squeeze setup
For Macro:
- Fed policy change
- Economic data surprise
- Geopolitical event
- Seasonality
Exit Strategies
Stop-Loss Methods
1. Percentage Stop
- Fixed % below entry
- Simple and clear
- Example: 2% below entry
2. Support/Resistance Stop
- Below key technical level
- Makes technical sense
- Varies by setup
3. ATR-Based Stop
- 1.5-2x Average True Range
- Adapts to volatility
- Prevents whipsaw
4. Time Stop
- Exit if no progress in X days
- Frees up capital
- Prevents dead money
Take-Profit Methods
1. Fixed R Multiple
- 2R, 3R, 4R targets
- Predetermined exit
- Consistent methodology
2. Technical Target
- Previous resistance
- Fibonacci extension
- Measured move
- Pattern target
3. Trailing Stop
- Move stop as profit grows
- Lock in gains
- Ride trends longer
4. Partial Profits
- Take 50% at 2R
- Trail remaining 50%
- Reduces regret
- Balances risk/reward
Position Sizing Formulas
Fixed Dollar Risk
Position Size = Account Risk $ / (Entry - Stop)
Example:
- Account: $50,000
- Risk per trade: $500 (1%)
- Entry: $100
- Stop: $97
- Risk per share: $3
- Shares: $500 / $3 = 166 shares
Fixed Percentage Risk
Position Size = (Account × Risk %) / (Entry - Stop)
Example:
- Account: $50,000
- Risk: 1%
- Entry: $50
- Stop: $48
- Risk per share: $2
- Shares: ($50,000 × 0.01) / $2 = 250 shares
Kelly Criterion (Advanced)
Position Size % = (Win Rate × Avg Win - Loss Rate × Avg Loss) / Avg Win
Example:
- Win rate: 55%
- Avg win: $500
- Loss rate: 45%
- Avg loss: $300
- Kelly: (0.55 × $500 - 0.45 × $300) / $500 = 28%
- Use 1/4 Kelly = 7% position size (conservative)
Warning: Kelly can be aggressive, use fractional Kelly
Trading Psychology
Pre-Market Routine
Emotional State Check
Don't trade if:
- Angry or frustrated
- Desperate for money
- Revenge mindset
- Distracted or tired
- Overconfident
- Fearful
Green light to trade:
- Calm and focused
- Following plan
- Accepting of losses
- Patient for setups
- Clear-headed
Tilt Recognition
Warning signs:
- Increasing position size
- Abandoning stops
- Taking marginal setups
- Revenge trading
- Checking P&L constantly
- Breaking rules
When tilting:
- Stop trading immediately
- Close all positions
- Take a break (hour/day/week)
- Review what triggered it
- Return when calm
Daily Loss Limit
Critical rule: Stop trading at daily loss limit
Example:
- Daily limit: -2% of account
- Account: $50,000
- Stop at: -$1,000 loss
Why it matters:
- Prevents blowup days
- Forces you to stop tilting
- Tomorrow is another day
- Protects capital
Market Conditions & Filters
When to Trade
When NOT to Trade
Market Regime Recognition
Bull Market:
- Buy dips
- Longer holds
- Reduce short exposure
- Follow momentum
Bear Market:
- Sell rips
- Shorter holds
- Reduce long exposure
- Focus on defense
Sideways/Choppy:
- Reduce size
- Take quick profits
- Avoid breakout trades
- Trade ranges
Performance Tracking
Metrics to Track
Win Rate:
- % of trades profitable
- Target: >50% for day trading, >40% for swing
Average Win vs Average Loss:
- Avg $ won on winners
- Avg $ lost on losers
- Should be 1.5:1 or better
Profit Factor:
- Gross profit / Gross loss
-
1.5 is good, >2.0 is excellent
Expectancy:
- (Win Rate × Avg Win) - (Loss Rate × Avg Loss)
- Must be positive to be profitable
Maximum Drawdown:
- Largest peak-to-trough decline
- Track and improve over time
Sharpe Ratio:
- Return / Volatility
-
1.0 is good
Trade Journal Requirements
For each trade log:
- Date and time
- Ticker/instrument
- Entry price and size
- Stop-loss and target
- Exit price and reason
- P&L ($ and %)
- Setup/pattern
- Market condition
- Emotional state
- Mistakes made
- Lessons learned
- Screenshot
Review Schedule
Daily:
- Review all trades
- Calculate P&L
- Note mistakes
- Plan next day
Weekly:
- Calculate weekly metrics
- Identify patterns
- Best/worst trades
- Rule compliance %
Monthly:
- Full performance review
- Strategy adjustments
- Goal progress
- Mindset check
Common Mistakes to Avoid
❌ Fatal Errors
1. No Stop-Loss
- One bad trade can wipe account
- ALWAYS use stops
- No exceptions
2. Overleveraging
- Position size too large
- Can't handle normal volatility
- Forced exits at worst time
3. Revenge Trading
- Trading to "get back" losses
- Emotional decisions
- Breaks all rules
4. Moving Stops
- Moving stop to avoid loss
- Invalidates risk management
- Path to blowup
5. Averaging Down Losers
- Adding to losing position
- Doubles down on mistake
- Increases risk dramatically
6. No Plan
- Winging it
- Inconsistent decisions
- Can't improve
✅ Best Practices
1. Risk < Reward
- Always 2:1 R:R minimum
- Selective trading
- Math works in your favor
2. Consistent Sizing
- Same risk each trade
- Removes emotion
- Sustainable growth
3. Follow Your Plan
- Even when uncomfortable
- Trust the process
- Track compliance
4. Take Breaks
- After losses
- When tilting
- Regularly
5. Keep Learning
- Review trades
- Study markets
- Adapt and improve
Using This Skill
Generate a Trading Plan
./scripts/generate_plan.sh
Interactive workflow guides you through:
- Trading style and goals
- Risk management rules
- Market and setup selection
- Entry and exit criteria
- Psychology and discipline
- Performance tracking
Validate Your Plan
./scripts/validate_plan.sh path/to/plan.md
Checks for:
- Risk management defined
- Position sizing rules
- Entry/exit criteria
- Stop-loss requirements
- Performance tracking
- Completeness
Calculate Position Size
./scripts/position_calculator.sh
Quick calculator for:
- Shares based on risk
- Risk amount
- R:R ratio
- Compliance check
Access References
references/risk_management.md - Complete risk frameworks
references/trading_psychology.md - Mental game and discipline
references/technical_setups.md - Chart patterns and entries
references/performance_metrics.md - Tracking and improvement
Trading Plan Checklist
Quick Start
Beginner Trader Template
- Risk: 0.5% per trade
- Style: Swing trading
- Daily loss: -1.5%
- Minimum R:R: 3:1
- Simple technical setups
- Conservative sizing
Experienced Trader Template
- Risk: 1-2% per trade
- Style: Your preference
- Daily loss: -3%
- Minimum R:R: 2:1
- Advanced setups
- Discretionary management
Important Disclaimers
This skill provides frameworks, not financial advice.
- Trading involves substantial risk
- Past performance ≠ future results
- Only trade with risk capital
- Educate yourself thoroughly
- Consider working with professionals
- Comply with all regulations
- You are responsible for your decisions
Risk Warning:
- You can lose all your capital
- Leverage amplifies losses
- Emotional control is critical
- No guaranteed profits
- Most traders lose money
Best Practices
1. Start Small
- Paper trade first
- Then micro positions
- Prove profitability
- Then scale up
2. Focus on Process
- Not on money
- Follow rules
- Track metrics
- Improve systematically
3. Protect Capital
- Risk management first
- Survive to trade tomorrow
- Slow and steady wins
4. Stay Disciplined
- Plan your trades
- Trade your plan
- No exceptions
- Review constantly
5. Keep Learning
- Markets evolve
- Adapt strategies
- Learn from mistakes
- Study the best
Summary
A trading plan is your blueprint for success. It:
- Protects your capital with risk management
- Guides decisions with clear rules
- Controls emotions through discipline
- Tracks performance for improvement
- Builds consistency over time
Remember: The goal isn't to get rich quick. It's to trade consistently, manage risk properly, and compound gains over time.
"Plan your trade, trade your plan, and manage your risk. Everything else is noise."
