How to read a trade plan: entry, stop loss, targets and R

A trade plan is written before the order goes in. It answers three questions:

1. Entry: where do I get in?
2. Stop loss: at what price is my idea wrong?
3. Target(s): where will I take profit?

R: one unit of risk

The distance from entry to stop is 1R. If you buy gold at 4,000 with a stop at 3,990, 1R is $10 of price. A target at 4,020 is +2R away. Results in R let you compare trades on different markets and sizes: a +2R gold trade and a +2R EURUSD trade are equally good, whatever the dollars.

Reading a model alert

BUY XAUUSD @ 4000.00
SL 3990.00
TP1 4015.00   (+1.5R)
TP2 4020.00   (+2R)
TP3 4030.00   (+3R)

This says: buy at 4,000; if price falls to 3,990 the idea is wrong; take a third off at each target. Examples like this on our platform are educational: they show how to read a plan, not what to trade. Your own entry, stop and size are always your decision.

Risk : reward is not the whole story

A 1:3 plan sounds better than 1:1.5, but if the far target is rarely reached it can earn less. What matters is expectancy: the average R per trade over many trades. You will learn to calculate it in the Strategy & Execution course.