Most trading mistakes aren’t made at the moment of the trade. They are made earlier, when nobody decided what the trade was for, how long it should run or what would end it. A plan moves those decisions to a quiet moment — before money is on the line.

It doesn’t need to be long. A good first plan fits on one page and answers five questions.

1. What are you trying to achieve?

Write down a goal you can check: “build a long-term portfolio for retirement”, “learn to trade with a small, fixed budget”, “save for a deposit in five years”. A clear goal tells you which products fit and which don’t — long-term saving and short-term trading are different games with different rules.

2. Over what time frame?

Money you need next year should not sit in volatile positions. Money you won’t touch for ten years can ride out bad months. Give every position a time frame and write it down, so that a bad week doesn’t turn a long-term plan into a panic sale.

3. How much can you afford to lose?

Decide on two numbers: the total amount you are prepared to put at risk, and the share of it you will risk on any single trade. Many traders cap the risk per trade at one or two percent of their account. Our guide to position sizing shows how that turns into a concrete number of shares.

If you don’t decide how much you can lose before the trade, the market will decide for you.

4. When do you get in?

An entry rule is a condition you can check, not a feeling. “The price closes above its 50-day average.” “I buy on the first of every month.” “I buy when the stock is back at my target price.” If you can’t write the rule down, you can’t follow it consistently.

5. When do you get out?

Every position needs two exits: one for when you are wrong and one for when you are right. A stop-loss limits the damage of a bad trade. A target or a review date stops you from holding a good trade until it isn’t good any more.

Your plan on one page

Put the answers together and you have a plan you can read in a minute — before every trade.

Example plan

Goal
Build a long-term portfolio and learn to trade with a small budget
Time frame
10+ years for the core portfolio, weeks to months for trades
Trading budget
$2,000 — money I can afford to lose
Risk per trade
1% of the budget: $20
Entry rule
Buy when the price closes above its 50-day average
Exit rule
Stop-loss 8% below entry; sell half at +15%
Review
Last Sunday of every month

An example of the format, not a recommendation. Fill in your own numbers.

Keep a journal

Write down every trade: why you entered, where your stop was, how it ended and whether you followed the plan. After twenty trades you will know more about your own habits than any book can tell you.