Your Trading Business Plan

A trading business plan is an operating document that defines how you trade, how much you risk, what strategies you use, and how you measure success.

Why Write It Down

Section 1: Account Size and Growth Targets

Be honest about your starting capital. This number determines your position size, return expectations, and available strategies.

Account Size	Monthly Return (2-5%)	Monthly Dollars
$5,000	2-5%	$100-$250
$10,000	2-5%	$200-$500
$25,000	2-5%	$500-$1,250
$50,000	2-5%	$1,000-$2,500
$100,000	2-5%	$2,000-$5,000

The return percentage stays the same regardless of account size because your scales proportionally. A 3% monthly return is excellent. Aiming for 20% monthly is a recipe for ruin.

Growth Targets

Capital Rules

Define your capital management: initial deposit amount, monthly additions, withdrawal rules (e.g., withdraw only above a 20% high-water mark), and reinvestment policy.

Section 2: Strategy Playbook

Your strategy playbook defines what you trade, when you trade it, and how you manage each position.

Strategy Definition Template

For each strategy, define every element:

How Many Strategies?

Start with one. Master it until you can execute it flawlessly. Most professionals actively use 2-4:

Markets and Instruments

Define what you trade: which markets (ASX, NYSE, NASDAQ), which instruments (stocks, ETFs, options), your universe (top 200 by market cap, specific sectors), and exclusions (penny stocks, recent IPOs, biotech).

Section 3: Risk Management Rules

Per-Trade Risk

• Maximum risk per trade: ___% of account (typically 1-2%)
• Maximum dollar risk: Calculated from account size and risk percentage
• Position sizing formula: Shares = (Account x Risk%) / (Entry Price - Stop Price)

Portfolio-Level Risk

• Maximum open positions: Typically 5-8 for swing trading
• Maximum portfolio heat: Typically 6-8%
• Maximum sector concentration: No more than 30% in one sector
• Maximum correlated positions: Limit positions in the same sector or highly correlated stocks

Circuit Breakers

Scaling Rules

Do not increase size during a , after a loss, or because you "feel confident." Return to full size after consecutive profitable weeks. Increase position size at pre-defined account milestones (e.g., every $5,000 growth).

Section 4: Trading Schedule and Routine

What You Do NOT Do

Section 5: Performance Review Cadence

Only adjust strategy based on a 30+ trade sample.

The One-Page Summary

Your plan distills into this north star: