Create a systematic trading plan that defines your strategy, rules, and goals. Learn journaling, backtesting, and performance tracking for consistent results.
A trading plan is your business blueprint. It transforms trading from gambling into a systematic business with defined processes, measurable outcomes, and continuous improvement. Without a plan, you're making decisions based on emotions rather than logic.
Pre-defined rules remove in-the-moment decision making when emotions run high.
Same process every trade means results become predictable over time.
Without documented rules, you can't identify what's working and what isn't.
Knowing you have a tested system helps you execute without hesitation.
Every successful trader has a plan. The plan might evolve over time, but trading without one is like driving without a destination—you'll go somewhere, but probably not where you want to be.
A complete trading plan covers six core areas. Each section should be detailed enough that someone else could execute your strategy just by reading it.
Define clear, measurable goals. "Make money" isn't a goal—"Achieve 5% monthly return with less than 10% drawdown" is. Include both financial goals and process goals (like "follow my rules 100% of the time").
Specify which currency pairs you'll trade and during which market sessions. Focus creates expertise. Most successful traders specialize in 2-4 pairs rather than trading everything.
Document your exact entry criteria. What conditions must be present? What patterns are you looking for? Be specific enough that entries become mechanical decisions.
Define your risk per trade (typically 1-2%), maximum daily/weekly loss limits, and position sizing rules. This is the most important section—it determines your survival.
How will you manage open positions? Where are stop losses placed? Do you scale in or out? When do you move stops to breakeven? Document every scenario.
When will you review your trades? Daily? Weekly? What metrics will you track? How will you identify areas for improvement?
Trading rules should be binary—either conditions are met or they aren't. Ambiguous rules lead to emotional decisions. Here's how to create clear, executable rules.
List every condition required before entering a trade. Use "AND" logic—all conditions must be present. Avoid "OR" conditions which create ambiguity.
ENTRY CHECKLIST - ALL must be YES:
☐ Price above 200 EMA on Daily chart
☐ Price pulled back to 20 EMA on 4H chart
☐ RSI between 40-60 (not overbought)
☐ Bullish engulfing candle forms at 20 EMA
☐ No high-impact news in next 4 hours
☐ Risk/reward minimum 1:2
If ANY box is NO = NO TRADE
Define exactly when you'll exit—both for profits and losses. Remove discretion from exit decisions.
Non-negotiable rules that protect your capital:
RISK MANAGEMENT RULES:
• Maximum 1% account risk per trade
• Maximum 3% total exposure at any time
• Stop trading after 2% daily drawdown
• No trading after 3 consecutive losses
• Position size = (Account × 1%) ÷ Stop Distance
• Never add to losing positions
• No trading during first/last 30 min of session
A trading journal is your most valuable learning tool. It transforms experience into knowledge by creating a record you can analyze for patterns and improvement areas.
Date, time, pair, direction, entry price, stop loss, take profit, position size, and outcome.
Which of your defined setups was this? Did it meet all criteria or did you take a "close enough" trade?
What was the trend on higher timeframes? Any relevant news? Market conditions (trending/ranging)?
How did you feel before, during, and after the trade? Rate your confidence 1-10.
Include a screenshot showing your entry with marked levels. After the trade closes, take another showing the full move. Visual review is powerful for pattern recognition.
For each trade, answer these questions: Did I follow my rules? What did I do well? What could I improve? Would I take this trade again?
Use spreadsheets (Excel/Google Sheets), dedicated software (Tradervue, Edgewonk), or even a physical notebook. The best journal is one you'll actually use consistently.
Before risking real money, test your strategy on historical data. Backtesting reveals whether your edge is real and helps you understand your strategy's characteristics.
Scroll charts back in time and "trade" your strategy as if in real-time. Record each trade as you would live. This is time-consuming but builds deep understanding of your setups.
You need at least 100 trades to have statistically meaningful results. 200+ is better. Don't draw conclusions from 20 trades—that's noise, not signal.
Beware of curve-fitting (over-optimizing for past data), lookahead bias (using information you wouldn't have at the time), and survivorship bias. Backtest results are typically better than live results due to these issues.
Regular review sessions are where improvement happens. Schedule time weekly and monthly to analyze your trading objectively.
Every weekend, review your week's trades. Calculate your statistics, identify your best and worst trades, and note any rule violations. Prepare for the upcoming week by marking key levels and events.
At month end, conduct a deeper analysis. Compare this month to previous months. Are you improving? What patterns emerge across your trades? Update your trading plan based on insights.
Trading is a journey of constant refinement. Each review should produce at least one actionable improvement. Small, consistent improvements compound into significant edge over time.
Plan → Execute → Record → Review → Improve → Repeat. This cycle never ends. The best traders are always learning, always adapting, always improving their process.
Find a broker that fits your trading style and supports your journey.