Lesson 06 · Beginner
Build a Plan Before You Buy
4 min read
A plan written after the buy is usually a story. Write it before the excitement arrives.
Define the entry
Record what you are buying, why you are buying it, and what would make the setup interesting. Avoid vague reasons such as 'everyone is in.'
Set the exit
Choose conditions for taking profit and conditions for admitting the thesis is wrong. You can use levels, time, or a change in the project's facts.
Size the position
Position size is how much money you put at risk. Start with the loss you can tolerate, not the return you imagine.
A concrete rule
A practical template is: I believe ___ because ___. I will risk $___, which is ___% of my portfolio. I enter at ___. I review at ___. I take profit at ___. I exit if ___. I will not add because ___. A plan with blanks is more useful than a confident paragraph.
Checklist
Before acting: verify the claim or address; write the thesis; calculate the dollar loss; check liquidity and permissions when relevant; set a review time; and confirm the amount will not affect essentials.
Do this today
Open a blank note titled Trade plan and fill every blank for a hypothetical token without connecting a wallet or signing anything.
Worked practice
Use this lesson on a small, hypothetical example before using it on a live decision. Start with a $1,000 portfolio and write the exact dollar amount you would risk. Then write the claim you are evaluating, the screen where you will verify it, and the time you will review it. If the answer depends on a screenshot, a private message, or a promise that cannot be checked, label it unverified. Next, imagine the price moves against you by 20%, 50%, and 90%. Do not predict the recovery; write what your plan says at each point. A written response exposes whether you have a rule or only a hope. Finally, read the plan aloud. If it sounds different from what you told yourself before the trade, keep the written version and wait. This exercise takes less than 10 minutes and gives you a record you can compare with the next decision.
Decision rehearsal
Run the decision in three passes. Pass one is observation: describe only what is on the screen, including the timestamp, market-cap display, liquidity display, holder view, and the exact wording of the post that brought you there. Pass two is interpretation: separate facts from guesses and write who benefits if attention increases. Pass three is choice: select wait, research more, or do nothing, and explain the choice in one sentence. If your choice is wait, set a specific review time rather than refreshing continuously. If your choice is research, name the source and the question it must answer. If your choice is do nothing, keep the note; declining an unclear setup is a valid result. This sequence prevents a vivid story from silently becoming a trading instruction and makes your future review more honest.
Mini story
Composite story: not a real person. Before a buy, Leo wrote a six-line plan on a sticky note: thesis, amount, entry, target, invalidation, and maximum loss. He chose $60 from a separate risk budget, not the $600 he first imagined. At 11:40 AM the chart moved against him. Because the plan existed before the candle, he reviewed facts instead of inventing a new story.
Key takeaways
- Write the thesis before the transaction.
- Plan both profit-taking and invalidation.
- Size from acceptable loss, not imagined upside.
Today's action
Open a blank note titled Trade plan and fill every blank for a hypothetical token without connecting a wallet or signing anything.
Knowledge check
Take the quiz yourself
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