Why We Write Our Trading Plan Before We Need It
What the UK's nuclear Letters of Last Resort can teach us about making decisions under pressure
Here’s a weird fact about the UK’s nuclear deterrent. (don’t worry, there is a trading analogy…
)
When a new UK Prime Minister takes office, one of the very first things they do is sit down and handwrite four identical letters.
Locked inside safes aboard each of the four Vanguard-class nuclear submarines.
These are called the Letters of Last Resort.
And they contain one thing…
Instructions for the submarine commander on what to do if Britain has been destroyed in a nuclear attack. If the government is gone and there’s no one left to give orders…
LETTER OF LAST RESORT
The sub commander runs through a checklist first. Can we reach Northwood command? Is BBC Radio 4 still broadcasting? But if all signs point to… yeah, it’s over… they open the safe.
The PM reportedly has four options to choose from:
- Retaliate with a full nuclear strike
- Don’t retaliate
- Use your own judgement
- Place yourself under the command of an allied nation
And when a new PM takes office, the old letters are destroyed unread. No one ever finds out what was written…
So what does this have to do with trading?
Well, let’s think about it…
The PM writes those letters when they’re calm, clear-headed, and rational. Sitting in the office, fire roaring, puffing on a cigar, contemplating the best course of action…
There are no missiles flying through the air, with minutes to decide.
They’re just sitting calmly, thinking about the worst-case scenario… and deciding in advance what to do about it.
That’s our trading plan.
We don’t write our risk rules during a drawdown when we’re under pressure. And we certainly don’t decide position sizing when we’re three losses deep, and our heads have gone.
We write them now whilst we’re calm and can think clearly.
Because when the moment comes… and we both know it will come… we won’t be the rational version of ourselves anymore. That “letter in the safe” is all we’ve got.
The whole point of the letter is this…
The British government knows that even a submarine commander with decades of experience is going to be sweating in that moment… he’s a human being.
So the big decision is already made for him. The commander just has to execute.
Sound familiar?
Go write your letter 
.