# Personal Trading Plan and Process Design Turn a vague intention into an observable practice routine. Use this workbook alongside the course. Write your answers before opening the solutions. Practical work is self-reviewed; scored knowledge checks are in the Academy. ## 1. Objectives and constraints ### Learning goals versus income expectations A learning objective describes a skill you can demonstrate, such as calculating exposure correctly. An income target describes an outcome that the market may not provide. Keep them separate so a practice session can succeed educationally without making money. ### Available time Available time constrains the methods that can be observed and reviewed consistently. A strategy requiring uninterrupted intraday monitoring may not fit a learner who can check only once daily. Choose a practice scope that can actually be followed. ### Affordable loss and personal finances Personal finances constrain what losses can be tolerated. Money required for near-term obligations has a different role from hypothetical demo capital. A demo balance is an educational setting, not evidence that the same exposure is affordable in a funded account. ### Instrument and session scope Define the instrument and session scope before collecting results. Changing instruments or hours after losses can make the record difficult to interpret. A narrow initial scope helps separate learning problems from uncontrolled changes in the experiment. ### Worked example A learner has thirty minutes each evening but selects a plan requiring continuous monitoring during a different session. The mismatch exists before any performance results. A suitable practice plan should fit the available observation and review time. ### Independent exercise Write one measurable learning goal, one time constraint and one instrument/session boundary for a two-week demo exercise. My inputs and assumptions: My calculation or decision: Evidence that would change my conclusion: ## 2. Decision rules ### Setup definition Define a setup using observations available at the decision time. Words such as strong or obvious need operational meaning. Another learner should be able to identify both qualifying and nonqualifying examples from the written rule. ### Entry and invalidation An entry trigger specifies what action becomes eligible and when. Invalidation specifies what would contradict the idea or end eligibility. A price objective alone is incomplete because it does not define when the hypothesis has failed. ### Exit and cancellation rules Exit and cancellation rules govern positions and unfilled orders separately. Include a time-based expiry where relevant. A trade that never enters still needs a clear rule for when its working order should no longer remain active. ### Conditions for no trade No-trade conditions are part of the strategy, not a failure to act. Examples include missing required data, an unavailable instrument or costs outside the research assumptions. Define them before seeing a tempting price move. ### Worked example A plan says buy a strong breakout but defines neither strong nor the reference level. Two learners select different trades. Replacing it with a specified observation window, level rule and confirmation condition makes disagreement visible and testable. ### Independent exercise Rewrite an ambiguous setup using observable context, trigger, invalidation and expiry fields. Include one condition that requires staying out. My inputs and assumptions: My calculation or decision: Evidence that would change my conclusion: ## 3. Routine ### Pre-session preparation Preparation checks the account, instrument, scheduled events and data quality before decisions begin. Record material observations rather than copying yesterday's assumptions. The purpose is to establish whether the planned process can operate today. ### During-session checklist A during-session checklist should be short enough to use and specific enough to audit. Separate eligibility, sizing and execution-state checks. A checkbox saying be disciplined is less useful than a field showing the intended quantity and its calculation. ### Post-session reconciliation Post-session reconciliation compares orders, fills, positions and charges with the journal. Resolve unexplained differences before interpreting performance. A clean-looking equity chart does not excuse an unreconciled execution or missing fee. ### Weekly review Weekly review looks for repeated process issues and evaluates them across a defined sample. Distinguish ordinary losses under the rules from violations or data errors. Change one bounded part of the process when evidence supports it. ### Worked example A profitable session contains an accidental duplicate order. Marking the session successful solely because P&L is positive would hide an operational problem that could be costly on another day. ### Independent exercise Write separate outcome and process notes for that session and specify a corrective action that can be checked next week. My inputs and assumptions: My calculation or decision: Evidence that would change my conclusion: ## 4. Plan evaluation ### Process metrics Process metrics measure behaviors such as complete records, rule compliance and reconciliation errors. Outcome metrics measure results such as net expectancy and drawdown. Track both; neither substitutes for the other. ### Version changes Version the plan when rules change. Record the date, reason and expected effect so later results can be assigned to the rules actually used. Mixing several versions without labels makes conclusions unreliable. ### Exceptions and reasons Exceptions should state who decided, what information was available and why the normal rule was not followed. An exception log is not permission to improvise indefinitely; recurring exceptions may indicate that the rule is poorly specified. ### Evidence required before increasing complexity Increase complexity only when it solves an identified problem and can be evaluated. Adding indicators or instruments after a small losing sample may obscure the original question. A simpler unchanged baseline helps judge whether the addition contributes useful evidence. ### Worked example A learner changes entry, stop and session rules together after three losses, then attributes the next win to a new indicator. The simultaneous changes and tiny sample cannot isolate the indicator's contribution. ### Independent exercise Design a bounded comparison for one proposed change while preserving an unchanged baseline and a record of all qualifying cases. My inputs and assumptions: My calculation or decision: Evidence that would change my conclusion: ## Course project Submit a one-page demo plan with eligibility, invalidation and review rules. ### Self-review rubric - Concepts and reasoning: 25% - Calculations, data and evidence: 30% - Process and risk controls: 25% - Limitations and communication: 20% Record one correction and one next practice task. This rubric is not automatically graded. ## Worked solutions ### Exercise 1 A defensible plan might require correctly documenting every eligible setup during a specified review window on one instrument. It should not require a daily profit or pretend that unobserved hours were monitored. ### Exercise 2 The answer should define each field without relying on a future price path. Staying out might follow missing data needed by the rule. A rule can be precise and still unprofitable; precision makes it testable, not correct by itself. ### Exercise 3 The outcome note records net P&L; the process note records the duplicate submission and resulting exposure. A corrective action could require a pending-order check before retries, with compliance reviewed across the next sessions. ### Exercise 4 Choose one change, freeze both definitions, use a predefined sample and compare net outcomes and compliance under consistent assumptions. Report uncertainty and avoid claiming that a few observations establish durable improvement. ## Further reading - https://www.investor.gov/introduction-investing/getting-started/asset-allocation