The risk plan template

Copy this, fill in the blanks, print it. Everything in it comes from the earlier lessons; the references in brackets tell you where each number is derived. The filled example after the template uses a $12,000 account and shows what a completed page looks like.

The template

RISK PLAN — [your name]           Version [n], effective [date]
Balance this plan is based on: $[______]   Next recompute: [first of next month]
Maximum drawdown I will tolerate before pausing: [___]%

SIZING (Module 2)
1.  1R (risk per trade) = [___]% of balance = $[______]
2.  Position cap: no single position over [___]% of balance = $[______]
3.  Leverage cap: total notional no more than [___]x balance = $[______]
4.  Always: size = 1R / stop distance, rounded down. Calculator: /tools/position-size

EXPOSURE (Module 5)
5.  Heat cap (total open risk to stops): [___]% = $[______]
6.  Theme cap (all positions in one bet): [___]% = $[______]
    My themes: [_____________________________________________]

LOSS LIMITS (Modules 5 and 6)
7.  Daily:   [___]R = $[______]   → close platform for the day
8.  Weekly:  [___]R = $[______]   → stop for the week, review log
9.  Monthly: [___]R = $[______]   → stop for the month, halve 1R next month

STOPS (Module 3)
10. Hard stop entered in the platform with every order. Never widened.
    Loss over 1.3R → 15 minute break. Moved stop → day over, logged as rule break.

MARKETS AND SESSIONS
11. I trade: [____________________]  during: [____________________]
    I do not trade: [_____________________________________________]

TILT RULES (Module 6)
12. Three consecutive losses → day over.
    No size increase on any day with a loss.
    No re-entry in the same instrument and direction within 30 minutes of a stop-out.
    Day reaches +[___]R → day over.
    Read the ticket size aloud before every entry.

SCALING (Module 6)
13. Raise 1R by 0.25 points only when ALL are true since the last change:
    ≥ 40 trades, expectancy ≥ +0.2R after costs, zero rule breaks, max drawdown < 8%.
    Ceiling: [___]%.
14. Drawdown 10% from peak → halve 1R until the peak is regained.
    Drawdown 15% from peak → stop live trading; 40 paper trades with positive
    expectancy before restarting at the halved 1R.

REVIEW
15. Monthly, [day]: trades, win rate, avg winner, avg loser, expectancy, total R,
    largest loss, longest streak, max drawdown, rule breaks, heat breaches, costs/trade.
    Recompute every dollar figure above from the new balance. Reprint.

Signed: ____________________   Date: ____________

Filled example: $12,000 account

RISK PLAN — A. Trader              Version 3, effective 1 Oct
Balance this plan is based on: $12,000   Next recompute: 1 Nov
Maximum drawdown I will tolerate before pausing: 15%

SIZING
1.  1R = 0.75% = $90
2.  Position cap 25% = $3,000
3.  Leverage cap 3x = $36,000 notional
4.  Size = $90 / stop distance, rounded down.

EXPOSURE
5.  Heat cap 4% = $480
6.  Theme cap 2.5% = $300
    My themes: long US equities, short US equities, long crypto

LOSS LIMITS
7.  Daily 2.5R = $225
8.  Weekly 5R = $450
9.  Monthly 8R = $720

MARKETS AND SESSIONS
11. I trade: MES, MNQ   during: 09:30–15:30 New York
    I do not trade: the first 5 minutes, FOMC days, anything over a weekend

TILT
12. +4R day → done.

SCALING
13. Ceiling 1.25%.

Check that the numbers agree, as in lesson 1: fifteen straight losses at 0.75% is a 10.7% drawdown, inside the 15% tolerance. Heat of $480 is about twice the daily limit of $225, so a full simultaneous stop-out is a bad day, not a disaster. The theme cap of $300 is under the heat cap. The leverage cap of 3× is far above the 0.5× that a 1.5% stop with 0.75% risk normally uses, so it will only ever catch a mistake.

Three checklists to keep with it

Before every trade

1. Where is the stop, and why there?
2. 1R ÷ stop distance = size. Rounded down?
3. Does the position exceed the cap? Does heat or the theme cap breach?
4. Is this market and this time on the list?
5. Have I lost three in a row, or hit a daily limit?
6. Ticket size read aloud and matches.

End of every day

1. Every trade logged with initial stop, exit, R.
2. Any rule break logged as such.
3. Daily P&L in R written down.
4. If a limit was hit: one sentence on the trigger.

Monthly

1. The twelve review metrics.
2. Per-setup expectancy for anything with 30+ trades.
3. Scaling ladder applied; 1R changed only if all four conditions pass.
4. New balance, every dollar figure recomputed, page reprinted and signed.

Key idea: The plan only works if it is physically present when you trade. Print it. A file you have to open is a file you will not open at 2:40pm.

Try it: Fill in the template now, using the derivation order from lesson 1. Then run the three consistency checks from the filled example on your own numbers: streak drawdown inside tolerance, heat roughly twice the daily limit or less, theme cap under heat.

What you have now

You finished Trading 101 knowing how markets work. You now have the only piece of a trading edge that does not depend on the market cooperating: a sizing method, a unit of measurement, a way to compute whether you have an edge, an understanding of where leverage ends you, a view of your whole book, and a page of rules that survive contact with a bad afternoon. The remaining courses are about finding entries. None of them will work without this one.

Recap

• The template has fifteen numbered lines; every number is derived, not guessed, and every dollar figure is recomputed monthly.
• Run the consistency checks: streak drawdown inside tolerance, heat about twice the daily limit or less, theme cap under heat, leverage cap well above normal use.
• Keep three checklists with the plan: before each trade, end of each day, monthly.
• Print it and sign it; the plan has to be in the room, not in a folder.
• Entries come later; nothing built on top of this course works without it.