Trading Plan
A trading plan turns every rule covered elsewhere in this course, entry criteria, position size, when to stop, into a single document written before a trade goes live, so none of it has to be decided under pressure.
Download the blank trading plan template (.txt), the same twelve sections covered below, laid out ready to fill in with your own numbers.
A document, not a memory
Something “known in your head” and something written down behave very differently under pressure. A vague intention is easy to bend in the moment it’s tested, because there’s nothing concrete to check it against. A written rule, entry criteria worded specifically enough to say yes or no, is much harder to quietly reinterpret mid-trade. Writing the plan down doesn’t make a trader more disciplined by itself, but it removes one of the easiest ways discipline slips: not remembering, in the moment, what was decided in advance.
What belongs in a plan, section by section
A working plan is specific enough that two different days produce the same decision given the same chart. That takes twelve sections, each with a real, specific answer instead of a general intention. The example running through each one below is for a breakout strategy on a European index, GER40, London session, to show what “specific” looks like in practice.
1. Know yourself and your goals
Before any rule about entries or risk, it helps to be honest about why the account exists and what kind of trader is running it. Two questions do most of the work: what does the account need to achieve, and over what timeframe, and what are the trader’s own real strengths and weaknesses going into it. A plan built around turning a small account into a full-time income within three months sets entry and risk decisions under pressure that a plan built around steady account growth over two years never has to deal with. Naming a real weakness, not a vague one, matters too: “I tend to move stops when a trade dips” is something a plan can build a rule around; “I need to be more disciplined” isn’t.
Example: Grow a $10,000 account by roughly 3-5% a month over the next 12 months while working a full-time job, treating any month of outright loss as normal variance, not a signal to increase size. Known weakness: moving stops further away mid-trade when a position dips, addressed by the trade management rule in section 9 below, which fixes the breakeven point in advance so there’s nothing left to renegotiate live.
2. Trading style and schedule
The style, day trading, swing trading, or position trading, decides almost everything else that follows, including which sections of this course apply. A day-trading plan needs defined session hours; a swing-trading plan needs rules for holding through overnight gaps that a day trader never has to think about.
Example: Day trading, London session only, 08:00–11:30 CET. Three sessions a week minimum, based on realistic availability around a day job.
3. Markets and instruments
“Forex” or “indices” isn’t specific enough to build entry criteria around. The instruments need naming, along with the reason they were chosen, liquidity, familiarity, or how well they fit the sessions being traded.
Example: GER40 only. High liquidity during the London session, familiar price behaviour from six months of demo trading, and it doesn’t require staying up for the US close.
4. Tools and contingency planning
The broker, platform, and data feed are part of the plan, not an afterthought picked once and forgotten. Just as important, and usually skipped, is a plan for when any of them fails mid-trade: what happens if the broker’s platform goes down with a position open, or the connection drops. Deciding this in advance, a backup way to close a position, a second broker, even just a phone number, means a genuine emergency doesn’t also become the moment a new decision has to be improvised from scratch.
Example: Primary broker X, platform Y. If the platform disconnects with a position open, close it via the broker’s mobile app immediately instead of waiting for a reconnect. Broker’s phone dealing line saved in contacts as a last resort.
5. Entry criteria
This is the heart of the plan: the exact, objective conditions that make a setup valid, worded specifically enough that two different traders looking at the same chart would make the same call. It’s just as important to say what doesn’t count, even when it looks close, see Entry Execution for why a “close enough” entry is really a different, worse trade.
Example: A clean 15-minute close above a pre-marked resistance level, on volume visibly higher than the prior four candles. A wick above the level that closes back below it does not count, regardless of how strong it looks intraday.
6. Exit rules: stop and target
Where the stop goes and where the target comes from need the same specificity as the entry. Stop Loss Placement covers why this should be structural instead of a fixed number of points, and Risk to Reward Ratio covers how the target gets decided.
Example: Stop below the swing low that preceded the breakout. Target 2R, or the next marked structural level, whichever comes first.
7. Position sizing and risk per trade
The risk percentage and the calculation that turns it into an actual position size, covered in full in Position Sizing, belongs here as a fixed number, not a range that flexes with how good a setup looks.
Example: 0.5% of account equity per trade, position size calculated from the stop distance in points using the account’s per-point value.
8. Daily and weekly loss limits
A single number decided in advance, along with a clear rule for what happens once it’s hit, see Daily Loss Limits for why this has to be set before a losing streak starts, not during one.
Example: 1.5% daily loss limit, stop trading for the day if hit. Weekly limit of 4%, stop trading for the week if hit. Maximum two trades per day regardless of outcome.
9. Trade management rules
What happens once a trade is open and moving, covered in Managing the Trade: when the stop moves to breakeven, whether any partial exits are taken, and at what point, decided now instead of negotiated live.
Example: Stop moves to breakeven once price reaches 1R in favour. No partial exits, full position runs to the 2R target or the structural level, whichever comes first.
10. Record-keeping and review
What gets logged after every trade and how often the log gets reviewed, covered in Trade Journaling and Post-Session Review.
Example: Every trade logged same-day: setup, planned versus actual entry/stop/target, size, and the reason for entry in the moment. Reviewed weekly against the plan’s own criteria.
11. When this plan does not apply
The situations where no trade should be taken regardless of setup quality: major scheduled news, illiquid hours, a broken platform connection, or anything else the plan needs to name explicitly. A plan silent on its own limits gets stretched to cover situations it was never built for.
Example: No new entries within 30 minutes of a German or eurozone data release rated high-impact. No trading in the first five minutes after the London open, spreads are unreliable.
12. Golden trading rules
A short list, five or six lines at most, of the rules that matter most personally, sitting at the very end of the plan as a final check instead of buried inside a longer section. These aren’t new rules, they’re a distillation of everything above into something that can be glanced at in ten seconds, which is what’s needed in the moment a trade is tempting a rule to be broken.
Example: 1. Always use a real stop order, never a mental one. 2. Never move a stop further away once it’s set. 3. No trade without the full entry criteria met. 4. Daily loss limit is not negotiable once hit. 5. If three rules get broken in a week, stop and review the whole plan before the next session.
Where to start if you don’t have one yet
The downloadable template above covers all twelve sections in a blank, fillable format, the fastest way to start is filling that in directly instead of building the structure from scratch. Babypips’ trading-plan lesson is also a well-known, free resource for the shape of one, and several brokers and prop firms publish their own free templates in their education sections. None of them will fit without changes, a template built for a swing trader doesn’t suit a scalper’s entry criteria, but starting from a structure that already asks the right questions is faster than inventing the format from nothing.
It needs testing before it needs following
A plan on paper is a hypothesis, not a proven edge, until it’s been checked against real trades or historical data. Committing hard to an untested plan simply because it’s written down and looks professional mistakes structure for validity, two different things. A plan earns the confidence to follow it strictly through a track record, not through how organised it looks on the page.
Key takeaways
- A working plan needs twelve specific sections: know yourself and goals, style and schedule, markets, tools and contingency planning, entry criteria, exit rules, position sizing, loss limits, trade management, record-keeping, when it doesn’t apply, and a short golden-rules list
- Each section needs a real, specific answer, “grow the account steadily” and “0.5% risk per trade” do real work; “trade well” and “manage risk sensibly” don’t
- A backup plan for broker or platform failure, and a short personal list of golden rules, are two sections most self-built plans skip
- The downloadable template covers all twelve sections in a fillable format, a faster starting point than building the structure from nothing
- Writing it down removes one of the easiest ways discipline slips: forgetting, under pressure, what was already decided
- A plan is a hypothesis until tested against real results, not something to follow strictly just because it’s written down
Nothing on this page is financial advice. Trade your own account, manage your own risk.
Nothing on this page is financial advice. Trade your own account, manage your own risk.