What needs to happen before the trade becomes valid?
Trade Planning · Guide
Build the trade beforethe market tests it.
Learn a simple trade planning process for defining entry, stop-loss, target, position size, risk and strategy rules before execution — then use the free Excel template to make the process repeatable and review planned vs actual trades.
A trade plan turns an idea into a decision. Entry, invalidation, risk, target and setup rules are defined while you are calm — before price movement and P&L start changing the decision.
WHY IT MATTERS
Most bad decisions happenafter emotion enters.
The market is noisy when a trade is live. Price moves, P&L changes and the reason for taking the trade can become blurry. Trade planning separates the calm decision from the live execution.
Before the trade, define what makes the setup valid, where the idea is wrong, how much capital you are willing to risk and what reward makes the setup worth taking.
The goal is not to predict every trade correctly.
The goal is to make the decision repeatable enough that you can review whether the process was followed.
DEFINITION
What is trade planning?
Trade planning is defining a trade completely before execution: the instrument, direction, trigger, entry, stop-loss, target, maximum risk, position size and strategy rules.
Where is the idea wrong and the trade should be exited?
How much are you willing to lose if the trade fails?
Did the actual trade match what you planned?
THE PROCESS
A 5-step trading planyou can actually repeat.
Use the same sequence before every trade. The exact strategy can change; the planning discipline should not.
01
INSTRUMENT
Choose the exact instrument and direction
Write the exact stock, futures contract, option or market you want to trade and whether the setup is long or short. A vague idea is not a trading plan.
02
TRIGGER
Define what must happen before entry
Set the condition that makes the trade valid — a price break, retest, time condition or indicator rule — and define the assumed entry before execution.
03
RISK
Fix the stop-loss before the position size
Your stop-loss defines the risk per unit. Your maximum account risk then decides how much quantity you can take. Size should follow risk, not conviction.
04
RULES
Check the setup against your strategy
Attach the trade to a named setup and confirm its checklist. When the setup does not satisfy your rules, the plan should tell you to skip it.
05
REVIEW
Write the reason and review the execution later
Record why the trade exists before entry. After execution, compare planned entry, planned risk and planned R:R with what you actually did.
Then review the gap.
Compare planned entry vs actual entry, planned R:R vs achieved R:R and strategy rules vs actual behaviour. That comparison is what turns a plan into feedback.
RISK MANAGEMENT
Position size should comefrom risk, not confidence.
Start with the amount you are willing to lose. The distance between entry and stop-loss determines risk per unit, and that determines the quantity.
01 · RISK PER SHARE
Planned entry ₹1,380 − stop-loss ₹1,250 = ₹130 risk per share.
02 · MAXIMUM TRADE RISK
If capital is ₹6,50,000 and your chosen risk limit is 2%, maximum planned risk is ₹13,000.
03 · POSITION SIZE
₹13,000 ÷ ₹130 = 100 units. The quantity is derived from the risk plan instead of being guessed.
PRE-TRADE CHECKLIST
Before the order, confirm the plan.
✓Exact instrument, segment and direction selected
✓Entry trigger defined before execution
✓Stop-loss fixed before position size
✓Maximum risk per trade decided
✓Position size derived from risk
✓Target and risk-to-reward checked
✓Setup matched to a strategy checklist
✓Pre-trade reasoning written down
FREE EXCEL TEMPLATE
Start trade planningwith a working spreadsheet.
Enter your planned prices, capital and risk percentage. The template helps calculate position size, total risk and risk-to-reward, and gives you a simple structure for planned vs actual review.
XQbarTrade-Trade-Planning-Template.xlsx
Field
Value
Field
Value
Entry
₹1,380
Stop-loss
₹1,250
Target
₹1,650
Capital
₹6,50,000
Risk / trade
2.0%
Risk / share
₹130
Max risk
₹13,000
Suggested qty
100
Total risk
₹13,000
R : R
2.08
Verdict
GOOD · Within your planned risk limit
Free · Excel templateDownload the Excel
What's inside
→Position sizing from capital, risk % and stop-loss
→Risk per share and total planned risk
→Risk-to-reward calculation
→Simple trade-quality verdict
→Filled example to understand the workflow
→Trade Log for planned vs actual review
Free download. Use it as a starting point for your own pre-trade planning workflow.
WHEN YOU OUTGROW THE SHEET
Turn trade planning intoa connected workflow.
The Excel is a strong place to start. QbarTrade's Trade Planner brings the same risk-first process into your journal so the plan, execution and review stay connected.
Plan before execution
Keep entry, stop-loss, target, trigger, risk and setup rules together instead of spreading them across notes and calculators.
Connect plan to execution
A saved plan can stay connected to the executed trade so planned vs actual behaviour is easier to review later.
Build a repeatable process
Use the same planning structure across equity, futures, options, MTF, commodity and currency workflows.
FAQ
Trade Planning FAQ
What is trade planning?+
Trade planning is the process of defining a trade before execution. It normally includes the instrument, direction, entry trigger, stop-loss, target, maximum risk, position size and the strategy rules the setup must satisfy.
What should be included in a trading plan?+
A practical trading plan should include the instrument, direction, setup, entry condition, stop-loss, target, risk amount or risk percentage, position size and a short reason for taking the trade.
How do I calculate position size for a trade?+
Start with the maximum amount you are willing to lose on the trade. Divide that amount by the risk per unit, which is the distance between the planned entry and stop-loss. This keeps position size tied to risk instead of conviction.
Is the trade planning Excel free?+
Yes. The QbarTrade trade planning Excel template is free to download from this page. You can use it to plan entry, stop-loss, target, risk, position size and then record planned vs actual results.
What is the difference between trade planning and a trading journal?+
Trade planning happens before execution and defines what you intend to do. A trading journal records and reviews what actually happened. Used together, they let you compare the plan with the execution.