Trading is getting tossed out of an airplane every single morning. You can either pack your own chute, or you can try to fashion one out of your jacket on the way down.
I was listening to a trading podcast this morning, and the guests were discussing something that sounds incredibly boring on the surface, but is actually the difference between life and death in this business: Trading Plans.
It got me thinking about how most people approach the markets, especially in the beginning. There is an intoxicating rush when you first fund an account. The possibilities seem endless. You feel intuitive. You feel ready to react to whatever the market throws at you.
And that right there—the reliance on “reacting”—is exactly why most traders blow up their accounts.
The podcast sparked a visual in my head that I haven’t been able to shake all day. It’s an illustration of risk, preparation, and the inevitability of gravity.
The Parachute Paradox
Imagine standing at the open door of a plane at 15,000 feet. The wind is screaming. The ground below looks like a blurred map. The green light turns on. It’s time to jump.
Now, imagine two different scenarios.
Scenario A: You spent the previous night meticulously packing your parachute. You checked the lines, you folded the canopy correctly, you secured the pins. You are nervous as hell – jumping out of a plane is inherently risky behavior – but you trust your equipment. You jump.
Scenario B: You just show up at the airfield in your favorite hoodie. You figure, “Hey, I’m athletic. I’m smart. I’m good at thinking on my feet. When I jump, I’ll figure it out on the way down. Maybe I can stretch this hoodie out to catch some wind.” You jump.
The stock market is that open door. Hitting the “buy” button is the jump.
90% of new traders are choosing Scenario B. They are jumping into a high-velocity, unforgiving environment with absolutely nothing to save them but their own adrenaline-fueled reactions. They are trying to fashion a parachute while already in terminal velocity.
The “Nicholas Alkemade” Exception
I know what some of you are thinking right now. “But I don’t have a formal plan and I’m up 20% this year! I’m doing fine.”
True. And in 1944, a WWII tail gunner named Nicholas Alkemade jumped 18,000 feet from a burning Lancaster bomber without a parachute. He crashed through the branches of a pine forest, landed in a deep snowdrift, and walked away with nothing but a sprained leg.
Sometimes, people survive the freefall out of sheer, blinding luck.
In trading, we call this survivorship bias. You might buy the right momentum stock on a whim or catch a lucky bounce, landing in the financial equivalent of a soft snowdrift. But you cannot build a long-term trading career on the strategy of hoping to hit pine branches. Gravity always wins eventually.
Do you think Nicholas Alkemade ever jumped out of a plane unprepared again? Of course not.
What is a Trading Plan, Really?
A trading plan isn’t a restrictive straitjacket designed to take the “fun” out of trading. It is a comprehensive business contract you sign with yourself before the opening bell.
A real trading plan is about anticipation, not prediction. We are surfers trying to ride waves we didn’t create; we cannot predict the market. Instead, we build an “If/Then” decision tree for multiple scenarios. You are forcing yourself to answer uncomfortable questions while your pulse is calm and your head is clear:
- The Setup: What exact technical or fundamental criteria must be met for me to enter?
- The Invalidation Point (The Stop): At what specific price point is my thesis proven wrong?
- The Profit Target: Where will I pay myself? Greed is just as dangerous as fear.
- The Curveballs: What happens if an unexpected news event tanks the market right after I buy? What if my trading platform crashes?
By anticipating these scenarios, you have already made the decision. When the event happens, you don’t have to think. You just execute.
The Reserve Chute Hurts (And That’s the Point)
Let’s go back to the skydiving analogy. Does having a packed parachute guarantee a perfectly smooth, comfortable landing? No.
Sometimes your primary setup fails. A gust of wind catches you. The main canopy tangles. When the market throws a violent move against your position, you have to execute your backup plan. In skydiving, this means “cutting away” the main chute. You actually drop back into terrifying freefall for a split second before you yank the reserve handle.
And let’s be honest about reserve parachutes: they aren’t built for comfort. They deploy with a violent jerk. Because they are often smaller and designed to open fast, you come in hot. You might land hard enough to bruise a hip or sprain an ankle.
It hurts.
Taking a strict stop-loss hurts, too. It bruises the ego and dents the account. But a bruised hip is a survival event; splatting on the tarmac is a terminal one. A trading plan forces you to accept the small, controlled injury—the managed loss—so you live to jump again tomorrow.
Now contrast that with the trader in the hoodie.
When the market turns violently against them, they have no backup mechanism. They are in freefall, flapping their arms, trying to turn a sweatshirt into life-saving equipment at 120 mph. This is the trader who freezes like a deer in headlights, or who doubles down on a losing position out of sheer panic, hoping to “make it back.”
Don’t tell me you haven’t done it. We all have at some point. Price went in the “wrong” direction. We cancel our stop loss at the last second, sure that we won’t have to incur this loss, that price will reverse again. And it keeps moving in the wrong direction. So we put more in – after all, if a long trade was a good idea at $100, it is an absolute steal at $90. Think of all the money we will make.
The worst thing that ever happened on my trading journey was this exact scenario paid out. Price did recover, and ripped up, and I made more than I would have with my original plan. It was terrible because it helped embed a bad habit that took a while, and several bad losses, to break. I thought I was Nicholas Alkemade, only I kept jumping out of planes.
Stop The Freefall
Trading is perhaps the hardest way to make easy money. The psychological toll of having your decisions constantly judged by the market’s price action is immense.
Why make it harder on yourself by going in unprepared?
When you are in a trade, your objectivity is immediately compromised by fear and greed. You cannot trust the “you” that is currently in the freefall to make good decisions. You have to trust the “you” that was standing safely on the ground the night before.
Define your edge. Define your risk. Accept the small bruises.
Stop trying to turn your hoodie into a parachute. Pack your gear before you jump. The ground is coming up fast.
