Build a complete trade plan
Convert an idea into conditions, invalidation, size and exit logic.
A plan is a decision made before exposure changes your incentives. It should be specific enough that another informed person can tell whether you followed it.
Thesis and trigger
The thesis explains why an opportunity may exist. The trigger defines what must happen before action. Separating them prevents an appealing story from becoming an automatic entry.
Invalidation and exit
Invalidation identifies evidence that the thesis is wrong. Exit logic covers profit-taking, time limits, event risk and what happens if conditions change without touching a price stop.
Pre-mortem
Imagine the trade failed. List plausible causes: gap, correlated exposure, poor liquidity, incorrect data, event surprise or behavioural error. Then decide which can be reduced and which must be accepted.
The lesson in three lines.
- 1A thesis is not an entry signal.
- 2Write invalidation in observable terms.
- 3Plan for non-price risks and events.