How Pros Plan Their Trades (Before Entering the Market)Introduction
In trading, the difference between professionals and amateurs doesn’t lie in who can predict the future—no one can—but in how they plan their trades before entering the market. Professionals treat trading like a business. Every position is carefully designed, risk is pre-calculated, and contingencies are set in advance. They know that planning is where the real “edge” lies, not in gut feelings or random speculation.
This article will explore how professional traders plan their trades—step by step—covering everything from market analysis, risk management, and entry/exit strategies, to psychology and record-keeping.
1. The Foundation: Trading Philosophy & Edge
Before professionals even open their charts, they have a trading philosophy that guides all their decisions. This philosophy is built around an edge—a repeatable method that provides higher probability setups over time.
Clarity of Method: A pro doesn’t jump between indicators or strategies every week. They master one or two setups and refine them.
Edge Definition: For some, the edge lies in volume profile analysis; for others, it’s price action, options strategies, or mean reversion.
Statistical Advantage: The edge doesn’t guarantee every trade wins, but over a large number of trades, it produces consistent results.
Example:
A price-action trader may specialize in breakouts with volume confirmation. They won’t trade anything that doesn’t fit this mold.
2. Pre-Market Preparation
Planning begins before the market opens. Professionals treat this like a pilot’s pre-flight checklist.
a) Economic Calendar
Check scheduled news: Fed meetings, RBI policies, inflation data, corporate earnings.
Avoid entering trades right before high-impact events unless news trading is part of the strategy.
b) Global Market Overview
Review overnight moves in U.S., European, and Asian markets.
Check GIFT Nifty, Dow futures, crude oil, bond yields, and currency moves.
These set the tone for local market sentiment.
c) Sectoral & Stock Scanning
Identify which sectors are strong or weak (banks, IT, energy, etc.).
Spot stocks near breakout levels or with unusual volume.
d) Mental Readiness
Professionals ensure they are calm, rested, and focused. Emotional imbalance leads to poor execution.
3. Trade Idea Generation
Once the groundwork is done, pros filter potential trades. They don’t chase random moves—they prepare a watchlist of high-probability setups.
a) Technical Analysis
Chart patterns: breakouts, pullbacks, double bottoms/tops.
Volume confirmation: rising volume on entry levels.
Key levels: support, resistance, moving averages, VWAP.
b) Fundamental Catalysts
Earnings beats/misses.
Mergers, acquisitions, product launches.
Policy changes or macro triggers.
c) Market Structure & Order Flow
Pros often use volume profile, order book, and liquidity zones to identify where big players are positioned.
Result: By this stage, they’ve shortlisted 2–5 potential trades for the session.
4. Defining the Trade Setup
A trade idea becomes a planned trade only when every detail is defined before entry.
a) Entry Criteria
Exact price level (e.g., breakout above ₹1,200).
Conditions (e.g., must have 20% higher-than-average volume).
Confirmation (e.g., wait for candle close above resistance).
b) Stop-Loss Placement
Always defined before entering.
Logical placement: below support, ATR-based, or volatility-adjusted.
Never random points.
c) Position Sizing
Based on risk management, not emotions.
Example: If risking 1% of capital per trade, calculate lot size accordingly.
d) Profit Target / Exit Plan
Define take-profit levels (e.g., risk-reward ratio of 1:3).
Partial exits if momentum slows.
Trail stop-loss as trade moves in favor.
5. Risk Management Blueprint
Professionals survive because they respect risk more than reward.
a) Risk per Trade
Usually 0.5%–2% of capital per trade.
Keeps account safe from drawdowns.
b) Risk-Reward Ratio
Minimum 1:2 or 1:3 setups.
If the target doesn’t justify the risk, they skip the trade.
c) Diversification & Correlation
Avoid overexposure in the same sector or correlated instruments.
d) Daily/Weekly Loss Limits
If daily loss exceeds a certain limit, they stop trading.
This prevents emotional revenge trading.
6. Psychological Preparation
Even the best plan fails if emotions take over. Pros prepare mentally before entry.
a) Neutral Mindset
They don’t “hope” or “fear”—they execute.
Losing trades are accepted as part of the game.
b) Visualization
Before entry, they visualize both winning and losing scenarios.
This avoids shock when markets move against them.
c) Detachment
They trade the setup, not the money.
Focus remains on following the process.
7. Executing the Plan
Once the trade is planned, execution is mechanical.
Place stop-loss immediately after entry.
Set alerts for key price levels.
Stick to the plan—no impulsive changes.
Golden Rule: Professionals never enter a trade without knowing exactly:
Why they’re entering.
Where they’ll exit if wrong.
Where they’ll exit if right.
8. Trade Review & Journaling
Planning doesn’t stop after entry or exit—it extends into review.
a) Journaling
Every trade is recorded: entry, exit, rationale, screenshots.
Notes on psychology (“I felt anxious”, “I overtraded”).
b) Performance Analysis
Weekly/monthly reviews of win rate, risk-reward, mistakes.
Identify which setups work best.
Eliminate low-probability trades.
c) Continuous Improvement
Plans evolve as the trader grows.
Strategies are refined based on data, not feelings.
9. Example of a Professional Trade Plan
Stock: Infosys (NSE)
Trade Idea: Breakout above ₹1,650 resistance.
Entry Criteria: Enter long only if price closes above ₹1,650 with 1.5x average volume.
Stop-Loss: ₹1,620 (below nearest support).
Target 1: ₹1,700 (partial booking).
Target 2: ₹1,750 (full exit).
Risk-Reward: 1:3.
Position Size: 1% risk of capital.
Exit Plan: Trail stop-loss after ₹1,700 is hit.
Notes: Avoid entry if global markets are negative.
This is how pros pre-define everything before touching the buy/sell button.
10. Common Mistakes Amateurs Make (That Pros Avoid)
Entering without stop-loss.
Trading based on tips or news without analysis.
Risking too much capital on one trade.
Shifting stop-losses out of fear.
Overtrading without a plan.
11. The Professional Mindset
Ultimately, pros see trading as a business of probabilities. Every trade is a bet with defined risk, like a casino operating with a statistical edge. They don’t need every trade to win—they just need consistency.
Discipline > Prediction.
Process > Outcome.
Risk Control > Profit Hunting.
Conclusion
Professional traders don’t enter the market blindly. Every move is backed by preparation, structured planning, and strict risk control. They design trades like an architect draws blueprints—nothing is left to chance.
For aspiring traders, the lesson is clear: spend more time planning your trades than placing them.
Planning is where pros win the game—execution is just following the script.
