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Summary

The trading plan is the operating charter of the system: it fixes goals, markets, strategies, risk parameters, and the checklists that gate every entry and exit. The TOMIC book frames the plan as a business document guarding against emotional decisions 1. This skeleton updates the TOMIC template for a news-driven, regime-aware system: risk parameters vary by regime state, and each playbook must carry a passing EV run before it becomes tradable.

Plan Questions (TOMIC template)

The plan must answer seven questions 1:

  1. What is the goal (income replacement, target annual return, learning)?
  2. Which markets and universes are traded?
  3. Which strategies are used?
  4. What conditions are required to enter a trade?
  5. What conditions trigger closing or adjusting a trade?
  6. What are the risk-management parameters?
  7. How are trades executed?

Goals (sample skeleton)

Item Value
Primary goal Income with capital preservation
Annual return target > 10% absolute
Monthly target ~1% of total capital
Hard floor No losing 12-month period
Process rule Short term, process over outcomes; long term, outcomes validate process 1

Markets & Universes

  • Start from a liquid underlier list (TOMIC 1.0 used 10: SPX, RUT, NDX, RTH, OIH, AAPL, CAT, EXC, MCD, WMT) 1.
  • Concentration cap: no more than ~20% of capital per sector 1.
  • Universe selection is itself a regime input: narrow breadth or elevated correlation shrinks the tradable set (see /60-regimes/index.md).

Regime-Aware Risk Parameters

TOMIC fixed parameters once; a regime-aware system scales them by state 1:

Parameter Calm regime Stressed regime
Max loss per trade 2% of capital 1% of capital
Max monthly loss 6% (then go flat) 3–4% (then go flat)
Portfolio concentration 20% per sector 10% per sector
Trade duration < 90 days < 45 days, or defined exit
New premium selling Normal size Reduced or suspended; prefer defined-risk

Entry / Exit Checklists

Checklists are the control surface — the book's checklist evidence (aviation preflight, Pronovost's clinical checklist) shows process lists beat memory under stress 1.

Entry checklist (every trade): - [ ] Regime state classified; playbook permitted in this state - [ ] Playbook exists and has a passing EV run (/80-system-design/ev-contract.md) - [ ] IV–RV spread and vol-forecast baseline checked - [ ] Risk parameters within regime limits (size, duration, concentration) - [ ] Exit and adjustment triggers defined before fill - [ ] Cost model (spread, fees, slippage) included in EV

Exit checklist (every close): - [ ] Exit trigger matched a pre-declared condition (profit target, short-strike touch, DTE, or adjustment rule) - [ ] Journal entry captured: entry/exit dates, prices, IV at entry, P&L, days in trade, return on margin 2 - [ ] Outcome fed back into playbook statistics and regime data

Playbooks

Individual strategies are not in the plan; the plan references the playbook library at /90-playbooks/index.md. A playbook is only tradable when it passes the EV contract and matches the current regime. Monthly performance analysis (win rate, average win/loss, expected payout) from the journal updates both the plan parameters and playbook selection 2.

Links

References

  • Open Knowledge Format v0.2 specification, section on the EV contract: ../../OKF_SPEC_v0.2.md
  • Options System Wiki charter: ../source.md
  • Cboe Global Markets product/documentation pages (e.g., https://www.cboe.com/us/options/), as applicable
  • ThetaData API documentation (https://docs.thetadata.us), as applicable

  1. The Option Trader's Hedge Fund, trading-plan topic (sources[]: tomic-plan). ↩↩↩↩↩↩↩

  2. The Option Trader's Hedge Fund, learning-processes topic (sources[]: tomic-learning). ↩↩