Learning note · Planning · Psychology
Building a simple trading plan
A one-page plan makes decisions repeatable and reviewable. What to include, a template you can copy, and how to review it.
A trading plan is a short set of written rules for what you trade, when, how much you risk and what you do when things go wrong. It does not need to be long or clever. Its job is to make decisions in advance, when you are calm, so that you are not making them in the moment.
Why write it down
- It turns vague intentions ("I'll be careful") into specific rules you can check.
- It lets you review results fairly, because you know which rules produced them.
- It gives you something to fall back on after losses, when revenge trading and overtrading are most tempting.
What to include
1. Markets and times
Which pairs you trade and when. Starting with one or two liquid major pairs keeps things simple. Note any times you will avoid, such as just before major scheduled news on the economic calendar.
2. Setup and entry
What conditions must be present before you consider a trade, and how you will enter. Write it so that someone else could tell whether a trade fits. "Price looks strong" is not a rule; something like "price closes above the previous day's high on the 1-hour chart" is.
3. Exits
Where the stop loss goes and why, where the target goes, and whether you will ever move the stop (for example, to entry after a certain move). Decide this before entering.
4. Risk and size
Your risk per trade as a percentage of the account, how you calculate position size, the maximum number of open trades, and how you treat correlated positions.
5. Limits
A daily or weekly loss limit at which you stop trading, and a rule for what happens after a run of losses, such as halving size or taking a break.
6. Record and review
What you record for each trade in a journal, and when you review it, for example every 20 trades or every week.
A one-page template
- Pairs: EUR/USD, GBP/USD
- Times: London and New York overlap; no new trades 30 minutes before high-impact news
- Setup: (your written conditions)
- Stop: beyond the most recent swing high or low; never moved further away
- Target: at least 1.5 times the stop distance
- Risk: a fixed small percentage per trade, size from the stop every time
- Max open: 2 trades, no two in the same direction on USD
- Stop for the day: after 2 losses or a fixed daily loss
- Review: every 20 trades, rules followed or broken
These values are examples to show the format, not recommendations. Choose your own and keep them realistic for your situation.
Reviewing the plan
Judge the plan over a reasonable number of trades, not after each result. Look at win rate, average R, drawdown and how often you followed the rules. Change one thing at a time, note the date, and give the new version time before judging it.
A plan cannot guarantee profits, and following one does not remove risk. What it does is make your trading consistent enough to learn from.
Rehearse a plan in the practice simulator, and use the risk management guide to set its risk rules.
Education, not advice. This note explains a concept with illustrative numbers. It is not a recommendation to trade. Currency trading carries risk, and losses can exceed expectations. See the risk disclaimer.