What goes into a trade plan?

What is a trade plan?

A trade plan is five decisions made before entry:

1. Entry: where you enter, with a market order or a limit order.
2. Stop loss: the price at which the trade idea is considered wrong. The distance from entry to stop is 1R.
3. Size: worked back from the money you accept to lose for 1R (position sizing).
4. Take profit: one or more take-profit levels, and what share of the position closes at each.
5. Other exit rules: what makes you close before the stop or target, such as a maximum holding time or a trend reversal.

With all five in place, there is no “what now?” question while the trade is running.

Why decide before entering?

• Once in a trade, you are no longer objective. When losing you want to wait; when winning you fear giving it back. Deciding first avoids both reflexes.
• Statistics become meaningful. If every trade exits differently, win rate and average R no longer describe your system.
• Risk is capped in advance. Size comes from the stop, so one loss cannot exceed what you accepted.

Where do traders go wrong when planning?

• A stop but no take-profit plan. Winners are held until they turn into losers, or closed too early out of fear.
• Targets set by feel. Targets should be in R so you know whether the potential reward justifies the risk.
• Widening the stop when price moves against you. The loss is now larger than the original 1R.
• Changing rules mid-stream. Breakeven today, not tomorrow: the final results reflect no rule at all.

Chart example

Illustration, not real market data.

A common plan: close 50% of the position at TP1 (+1R) and 50% at TP2 (+2R). The result depends on whether, after TP1, you keep the stop or move it to breakeven:

Breakeven protects the remaining position, but it also closes many trades on normal pullbacks before they reach TP2. Neither choice is right in every case; what matters is choosing in advance and staying consistent.

How does AURORA draw the trade plan?

Every signal that is entered in AURORA Standard and AURORA Pro comes with a plan drawn on the chart: a red risk box, a green target box, and Entry, F-SL, TP1 and TP2 labels.

• F-SL is the fixed stop set at the signal candle. For BREAK and SUNNY it defaults to the Trailing line value at the candle close. T-SL is the dynamic stop following the current Trailing line, a reference for manual management.
• Defaults: TP1 = 1R, TP2 = 2R, closing 50% / 50%.
• After TP1: BREAK and SUNNY setups keep the F-SL by default, as in the original setup. Smart signals move to breakeven by default. In AURORA Pro, the Scalping and Prop Firm Trading Styles turn on breakeven for setups too.
• Early exits, Adaptive mode (default): EXIT when the Trailing line flips, TIME when the maximum holding time runs out (200 bars by default), REV on an opposite signal, NEXT when a new same-direction Break takes over.
• Result labels are written in R, for example ✓ +1.5R · TP2 or ■ 0R · SL, and the dashboard adds up results for each setup.

You do not need AURORA to have a trade plan: one note line with the five parts above is enough.

When does the plan not play out as drawn?

• Gaps and slippage. Price can jump through the stop; the real loss exceeds 1R.
• Sizes that cannot be split. With one futures contract or a minimum lot size you cannot close 50%; the plan must become a single full exit.
• Statistics exclude costs. Chart results are historical and before commission and slippage. Use the Strategy Validator for figures after costs.
• Every market is different. A 1R / 2R plan that suits gold H1 may not suit crypto M5. Check it on the exact symbol and timeframe you trade.