What is a trading plan?

A trading plan is a short written document with the rules you trade by. You write it when you are calm, so you do not have to make important decisions under pressure.

A simple template

1. Goals and limits

  • Why I am trading, and how much money I can afford to lose in total.

2. Markets and times

  • Pairs I trade (for example EUR/USD and GBP/USD).
  • Times I trade (for example 10am-7pm EAT, not during major news).

3. Entry rules

  • The exact conditions that must be true before I enter. Be specific.

4. Exit rules

5. Risk rules

  • Risk per trade: for example 1% of my account.
  • Daily loss limit: for example stop after 3% loss or 3 losing trades.
  • Maximum number of open trades.

6. Record keeping and review

  • I record every trade in a journal.
  • Every weekend I review my trades and check whether I followed the plan.

Example rules (for illustration only)

These rules are an illustration of how specific a plan should be, not a strategy we recommend.

Review and adjust slowly

Change your plan only after reviewing a meaningful number of trades, and change one rule at a time so you can see what made the difference.