What Is a Trading Constitution? A Structured Rules Framework

A trading plan often mixes several kinds of statement: goals, setup preferences, risk limits, reminders, and broker instructions. That makes it difficult to tell which parts can be checked and which still require judgment.

TradeRegimen uses the term Trading Constitution for the structured subset of that plan. Each supported field has a defined input and can be surfaced at the relevant point in the app.

A Constitution does not remove discretion. It shows where the current plan agrees or conflicts with decisions made earlier.

The supported rule groups

Risk and position capacity

• Risk per trade as a percentage of account equity.
• Maximum dollar value for one position.
• Maximum number of concurrent positions.
• Maximum total open risk measured in configured R units.

TradeRegimen's current risk-per-trade input accepts 0.5% through 5%. Its Quick Start choices use 0.5%, 1%, and 2%. These are product settings, not recommended risk levels. Suitability depends on the trader's strategy, finances, objectives, and tolerance for loss.

Daily and weekly loss boundaries

The daily field is a count, not cumulative daily R. It counts recorded positions that realized -1R or worse during the current day. The current setting accepts two through five qualifying trades. The weekly field is separate and compares cumulative recorded R with a boundary from -2R to -6R.

Leveraged Sector Limit

This is a narrow concentration rule. It counts leveraged positions in the same canonical sector; it is not a general correlation model. The current manual entry request does not provide the proposed position's sector, so a leveraged ticker can return an explicit unavailable warning instead of a false pass.

Market Context response

The rule compares the Market Context model direction with the user's selected SPY/QQQ tape requirement. A conflict can be configured to show a warning at normal size, cap supported sizing guidance at half and three open positions, or pause new-position sizing with a zero-share result. The safe default requires at least one confirming index and neither index opposing the direction, then applies the half-size response on conflict.

Those are rule states inside TradeRegimen. There are no automatic Bullish, Neutral, and Bearish multipliers, and no state controls a broker order.

Scale-out checkpoints

Scale-out tiers specify a percentage, a structural target slot, and a positive-R fallback, with the configured percentages totaling 100%. The current suggested configuration assigns 50% to frozen T1 with a +2R fallback and 50% to frozen T2 with a +3R fallback. The app reads the current Constitution tiers when coaching is requested, while selected structural target levels are snapshotted with the position. It does not submit exit orders.

What is not in the Constitution

A complete trading plan may contain rules that the current Constitution does not store. Keep those separate rather than implying the app checks them.

• A required stop method, such as a moving-average or chart-structure stop.
• A breakeven rule or trailing-stop instruction.
• A thesis-invalidation or fundamental exit rule.
• A timer-based cooldown or maximum number of trades per session.
• A general sector, theme, or statistical portfolio-correlation cap.

Some of these may belong in a written playbook or in broker-native order controls. Their absence from the Constitution does not make them unimportant; it means they should not be marketed as checked fields.

A fictional configuration

Consider a fictional $200,000 account using the following values only to illustrate how the fields connect:

• 1% risk per trade, making one configured R unit $2,000.
• $20,000 maximum position value.
• Six concurrent positions and 4R maximum open portfolio risk.
• Three daily qualifying stop-outs and a -3R weekly boundary.
• At most three leveraged positions in the same sector.
• One confirming index, neither opposing; cap to half on conflict.
• 50% scale-out allocation at +2R and the remaining 50% at +3R.

These values are internally consistent with the current product, but the example is not a recommendation. A different account or method may call for different settings within the supported ranges.

What happens during manual position entry

1. The user supplies the ticker, direction, entry, stop, and shares.
2. The app calculates risk and retrieves the saved Constitution.
3. Six rows show Market Context, daily loss, weekly loss, leveraged-sector, sizing, and exposure states.
4. The app labels conflicts and calculates supported sizing guidance.
5. The user can cancel, revise the plan, or acknowledge supported exceptions.

The result is a visible checkpoint and an audit trail. It is not an order ticket, and it does not prove that a trade is suitable or likely to make money.

Review and amend deliberately

A Constitution should be stable enough to compare decisions over time but not frozen forever. TradeRegimen requires a reason for an amendment and currently applies a seven-day cooldown between changes. Review the rule against your own recorded evidence rather than rewriting it during one stressful position.

To build the fields in sequence, use the step-by-step Constitution guide. For the risk calculation underneath one R unit, read R-multiple position sizing.

Sources and review context

• FINRA's risk-tolerance guide explains why risk choices are personal rather than universal.
• Product fields, validation ranges, checks, override behavior, and legal boundaries were reviewed against the current implementation on September 14, 2026.