For example, with a trading plan, you can define your trading goals, strengths and weaknesses, risk management strategy, trading strategy, entry rules, exit rules, daily routine, etc. So, now that you understand what a forex trading plan is, you need to create your own specific plan that matches your style and personality. Personally, while working as a trader in a proprietary trading firm , I remember every trader had a different method, routine, tasks, and rules.

For example, some traders like adding sticky notes on their desktops while others prefer a clean table. Further, some traders enter hundreds of trades in one trading day while others enter one or two trades in a day. Nonetheless, based on my knowledge and experience, there are some must-have steps you need to consider to develop a successful trading plan. By clicking the 'Download' button you agree to our Terms of Service and Privacy Policy. First and foremost, you must define your goals.

In other words, you will need to know what you plan to achieve from your trading experience. Instead, some traders do it for fun, a hobby, or a competitive game. So consider these factors as well. If this is the case for you, then you need to know it before you start trading. Maybe it gives an advantage over other participants in the forex market. Before you make your first trade in the forex market, you first must understand the trading jargon and the different analysis methods.

If needed, take a quick trading course to learn how the forex or the stock market works, read articles, books, financial sites, etc. Additionally, you better explore the two methods to analyze financial assets — technical analysis and fundamental analysis.

Then, find the best way for you to analyze the markets and read forex charts. Additionally, you can learn how to read popular chart patterns and use them to find trading opportunities. Once again, you have to try before you know it… go ahead and try. There are no two traders that are precisely the same. Therefore, you must find your own trading strategy and trading style. And this is a result of trial and error. For that matter, you need to use a trading plan at the beginning of your journey to find the right strategy that matches your personality.

Trading risk management is a predefined strategy to minimize losses and maximize profits. There are lots of tools and risk management rules a trader can use to protect themselves from losses and effectively manage their trading account.

In other words, it is a method to define your trade risk, that is how much risk you are willing in a trader, or in a day the method is particularly for day trading. Trading is not like most professions. The markets always change, the technology evolves, and even the dynamic of the markets is constantly changing. Trust me, financial markets are not the same as they used to be fifteen years ago, and most likely, they will change again in the future. I mean, the cryptocurrency market is one good example of the unpredictable nature of the trading world and financial markets.

This way or the other, you must read trading books and articles, watch movies , listen to podcasts — everything you can do to increase your knowledge. Yes, knowledge is power, but in trading, knowledge is essential. In the final step, make sure you analyze your trading past performance and keep track of your winning and losing trades. This is why a plan is essential. It is a list of strategic responses to events beyond your control. As stated above, the former is a complete set of rules that governs every aspect of your trading life.

It goes into great detail and may, for example, stipulate the amount of time devoted to reading threads on T2W! However, these are merely elements of an overall trading plan and possibly not even the most important ones. It is perfectly feasible, desirable even, to include two or more trading strategies i. entry and exit criteria within an overall trading plan. If you have achieved this, then this document may not tell you anything you do not already know.

It is quite literally the route that will take you from where you are now to where you want to be which, for most traders, is consistent profitability. In this analogy, consistent profitability is the destination. Similarly, to embark on trading without a clear idea of where you are going, and how you are going to get there, will almost certainly result in increased stress, sleepless nights and financial loss - or all three.

The question you must ask yourself is this: if you would not dream of driving from the north of Scotland to the most southerly tip of England without a detailed roadmap, why on earth have you not got a detailed and clearly laid out trading plan?

It will limit your opportunity to make bad trades and it will prevent many psychological issues from taking root. It will help you to achieve these things because wherever you are on your trading journey, it will not only act as a roadmap, but also locate your position as well. Most importantly, if your trading is going badly, you will know it is down to one of only two possibilities: either something in the plan is not working or you are not adhering to the plan.

If the plan is a good one and it is back tested and paper traded, or forward tested with a very small amount of money then the fault is likely to be found in the latter of the two options. But, what if you are losing money whilst trading without a plan? It is virtually impossible to distinguish what you are doing right from what you are doing wrong. You have no way to evaluate your results, therefore the likelihood of being able to diagnose the fault and correct it is small and could take forever.

A trading plan is your personal GPS device to locate your position and, if you have made a wrong turn, it provides the means to identify where you went wrong and how to get back on track. You are able to evaluate continually your results and, more importantly - your discipline - in a manner that is objective and comprehensive. This is extremely difficult to do if you do not have a plan.

Emotional issues will become very powerful when real money is on the line and, as likely as not, force you into making irrational decisions. A plan will instil a large measure of discipline into your trading. How many times have you let a loss run and cut a profit short because it was the comfortable thing to do? The template is broken down into eleven units. The objective of the exercise is to end up with a plan that is tailor made to suit your personality, ability and resources.

Do not be tempted to skip any sections and be sure to work through them in the order that they appear. The order is specific for reasons that should become clear in due course. Think of the eleven units as links in a chain or as individual players in a football team; each one is as important as the other.

Although the template is designed to be as simple as possible, be sure to give careful consideration to all your answers. For example, the first unit poses the question, why do you want to be a trader? It is not personal to you and, therefore, it is not helpful to your plan. You might enjoy a cappuccino from time to time, but chances are that you would not dream of taking up a Starbucks franchise - so why become a trader?

If so, you may have a need for excitement. Ordinarily, such a desire is an admirable one but, in the markets, it could easily lead to catastrophe if allowed to go unchecked. Perhaps you have heard stories about traders making tens of thousands in a single day? Crushing disappointment is often the reward for unbridled greed. Pie in the sky fantasies about trading via a laptop while aboard a luxury yacht, sipping champagne in the Bahamas, are great fun, but they are hardly grounded in reality.

Such fantasies may help to motivate you to study the markets, but the emotions that accompany them may not help you when it comes to trading the markets. Just as the trader with a lust for excitement is doomed to fail, the fate of a trader motivated by greed is almost certain to lead to disaster. Think very carefully about these questions and be brutally honest with yourself. Do not pretend to be someone you are not because you are embarrassed to commit pen to paper and admit that you are a thrill seeker chasing the Holy Grail of easy money.

In answering the question about why you want to be a trader, you will uncover the real motivations, fears and desires that fuel your ambition. Some of these will be helpful whilst trading, others not. How you allow them to impact your trading is what this document is, to a large extent, all about. To ensure that the impact is a profitable one, you must start by examining your real reasons for trading and, hopefully, learn more about yourself in the process.

Then there is a basis for an answer in small Arial italic type, like this to provide further clarification. The latter is intended as a guide only and is not meant to constrain your thoughts and ideas in any way. There is no room for ambiguity in your plan; so avoid vague, fuzzy statements. Also, where possible, always define and qualify your statements. This usually means posing the questions - what, when, where, why or how. For example, suppose you swing trade the Dow Jones 30 Index.

Why the DOW and not the FTSE ? Because you want to trade in the evenings, after work? Okay, fair play. How will you ensure your success? Aha, you will start by writing a trading plan? When will you write it?

You get the general idea. Now, let us begin. Know Yourself, Know Your Purpose 5. Many inexperienced traders are unprepared for the violent assault on their thoughts and emotions at the start of their careers. They soon find their heads spinning with euphoria when winning greed and the pits of their stomachs knotted with anxiety when losing fear.

Contrast this with many professional traders who, it is said, achieve a sort of trading nirvana, whereby their thoughts and emotions blend into a sea of calm regardless of whether they are winning or losing. Their heads do not spin and their stomachs do not churn — ever. For you to achieve this exalted state, you will need to know yourself and how you will react to both winning and losing positions. Once armed with this information, your trading plan can incorporate some of the positive aspects of your psychological make-up and filter out some of its negative aspects.

What is your purpose - what does success as a trader mean to you? Decide what it is that you want to achieve and then ask why and how trading is going to provide it. How sad it would be if, after a year or more and hundreds if not thousands of pounds later, you realised that trading was not for you after all and that the ladder to success was leaning up against the wrong wall.

Okay, here goes — your very own trading plan starts now. Question your true motivations. Examine whether your talents would be better suited to another business like the Starbucks franchise mentioned earlier. Are you certain that trading is the right business for you?

If you believe that the markets exist for the sole purpose of showering you in vast quantities of easy money — then think again! Beware: it is NOT the easy option! I want to be a trader because. My primary objective in wanting to be a trader is to. My secondary objective is to. spend more time with my family and enjoy the freedom of being able to trade from anywhere in the world. These objectives are important to me because. they provide purpose and direction to my life and enable me to lead a more balanced one.

I believe I can achieve my objectives because. my name is Larry Williams - say no more! Are you a discretionary trader or a mechanical one? Do you propose to trade in the long-term i.

months , medium-term i. weeks or short-term i. days or, even, intra- day? The choice of position trader, swing trader or day trader will, to a large extent, be determined by the amount of time you are able to devote to your business. Generally speaking, day traders remain glued to their monitors throughout the duration of every trade, whilst position traders may devote as little as one hour a week to the markets. Define your trading style and examine your beliefs about the markets.

I am a discretionary trader and my style is very. aggressive - which makes me suited to scalping intraday or, alternatively, conservative — which makes me suited to swing trading end of day E.

I understand that I cannot predict the future and I accept that I cannot control the markets. However I can control myself, which I will do by. adhering strictly to my trading plan that is detailed, specific, tested and profitable.

List each of your trading strengths and weaknesses and then specify how you will maximise the benefit of the former and minimize the damage caused by the latter. This is often easier to do for other people than it is to do for yourself.

Your background may provide some clues. Suppose you are an ex-fighter pilot who is used to working in a highly disciplined environment and adhering to a set of very strict procedures.

Potential strength. However, the flip side of the coin is that you may also have a need for fun, or an addiction to adrenalin pumping, nail biting excitement or, even, a subconscious desire to experience fear.

Potential weakness. If you are struggling to answer this question, try paper trading for a while and examine each trade, noting what you did right and what you did wrong. Do this until a pattern starts to emerge which should reveal your strengths and weaknesses to you.

My primary strength is. allowing my profits to run and closing trades in accordance with my exit strategy. My secondary strength is. My primary weakness is. wanting to recoup a loss quickly which, almost inevitably, results in increased losses. The following aspect of my trading plan will help to control this weakness and prevent losses from spiralling out of control. I have a pre-defined daily stop. If it is hit, I stop trading for the day.

My secondary weakness is. Your mindset is the key obstacle that lies between you and success in the markets. Have you slept well; are you fit, healthy and mentally alert?

Are you calm and relaxed or are you tired and distracted by other events in your life? I am rested, relaxed and not distracted by work or family etc.

I will be guided by my trading plan and I will adhere to it rigidly. It will help to prevent me from making trades that are poorly conceived and executed; i. I will not trade on days when.

I am feeling off colour, hung over, particularly tired or when I am mentally distracted by other events in my life. There are numerous reasons for becoming a trader; making money is the one reason that unites us all. Your targets are not idle fantasies, they must be based upon your back and forward testing results. This is expanded upon in sections My financial targets are. Trading Goals 6. Try to define your goals in terms of your development as a trader, as opposed to purely financial goals.

If you focus on becoming a proficient trader, the financial rewards are sure to follow just as night follows day. Then decide how you will achieve these goals and how you will reward yourself once you do.

The rewards should reflect the scale of the achievement as well as being specific and meaningful to you. For example, the reward of a night out should name both the venue and the people you intend to take with you. This is the big picture. Think in terms of the skills and knowledge that you want to acquire between now and this time next year.

My annual trading goal is to. At the moment, this comprises three separate elements, namely: 1. I model the best trading practices, including having a written, clearly laid out trading plan. My strategies are well developed, tested and monitored comprehensively to ensure that they remain tradable, market sensitive and profitable.

I expect to achieve these goals because. When I achieve my goal, my reward will be. Now define your monthly trading goals. Again, avoid financial targets as much as possible.

How will you achieve these goals and how will you reward yourself when you do? My monthly trading goal is to. achieve consistent profitability every month, with a Success ratio of or more and a Sharpe ratio of 1. When I achieve this, my rewards will be. Time to get out the magnifying glass and zoom in on the details. Now define your weekly trading goals.

How will you achieve them and how will you reward yourself when you do? My weekly trading goal is to. trade every day of the week in accordance with my trading plan. This will entail taking my stops instantly; sticking to my risk and money management strategies; following my exit criteria and devoting most of my time to searching for new trades and choosing only the very best setups.

When I achieve this goal I will pat myself on the back by. Finally, put away the magnifying glass and get out the microscope. On a day-to-day basis, what are you trying to achieve? How will you measure your progress and how will your hard work be rewarded? My daily trading goal is to. trade according to my plan. Today I will stick to my plan because it is detailed, specific, tested and profitable.

I am confident that I have the self discipline to adhere to it which, in turn, will ensure that my weekly, monthly and annual goals are met. Assuming that I stick to my plan, I will pat myself on the back by. Nothing blended - single malt, obviously! Decide upon the market you wish to trade; the instrument s that are available within that market and the reasons for your choice.

As a general rule of thumb, professional traders tend to restrict their focus to a limited number of markets and instruments. By contrast, novice traders tend to trade index futures one day, currency pairs the next and exotic sounding commodities like pork bellies the day after that, etc!

stocks in the evening after work because good opportunities exist in the pm session. They also provide excellent liquidity, volatility, tight spreads, fast fills, low commissions and no stamp duty. Will you confine yourself to a basket of stocks or will you trade anything and everything on the XYZ exchange?

If you trade futures, how many different markets will you trade, and why? If you are a forex trader, how many currency pairs will you trade, and why? not exceed X and be determined according to their liquidity, i.

a minimum daily volume of 2 million shares, and according to their volatility, i. Hopefully, you have decided what sort of trader you are or want to become, i. an intraday, swing or position trader. Now you need to focus in on your timeframes within the category of your choice. Be very clear in your own mind about the number of timeframes you use and why you use them.

For example, a day trader may use a 1 minute timeframe to enter a trade, a 5 minute timeframe to exit a trade and a 15 minute timeframe to help determine the trend throughout the duration of the trade.

As a swing trader, I will use. daily charts to determine the trend; 10 minute charts to enter and exit positions and 60 minute charts to monitor my open positions. Tools of the Trade 8. Whichever vehicle you use to trade; Shares, Spread Betting, Contracts for Difference C. understand fully the pros and cons associated with your choice. This applies to Spread Betting especially. Without question, it is a very popular financial product that is ideal for novice traders, but it does have its drawbacks.

For example, it is almost impossible to day trade profitably using this trading vehicle. My choice of financial vehicle is. Spread Betting because I can open an account with just £, trade just 1p per point and profits are currently tax free.

However, I understand the limitations of this product and that it is best suited to swing trading. Both players would perform well with any old kit, but choosing these primary tools with great care helps them to achieve consistent sporting excellence.

The instruments that you wish to trade. If, for example, you wish to trade U. The vehicle or financial product you use to trade the instruments of your choice. Spread betting, C. The size of your account. If you have only limited capital with which to fund your trading, you are not going to be able to open a Patten Day trader P. account with a direct access broker.

Furthermore, the choice of brokers offering C. Ds is likely to be limited. Spread Betting may be your only viable option and is where many new traders start. The platform you use to trade. Our Options Gold is where it all started and our most popular. Join us! Memberships Mastery Premium Reports Options Futures Simpler Day Trading Fibonacci BIAS Scanner Foundation Simpler Edge Store Courses Indicators Trading Resources Trading Education Trading News Simpler Tech Newsletter Sign Up Blog Our Traders Login.

Download the trading plan template To figure out which trading strategies fit your personality and trading goals, it helps to see examples of trading plans. Here is what to include in a trading plan: Why are you trading?

What are your goals? What time-frames will you trade?

The one thing all serious traders have is a Forex trading plan. A trading plan ensures you have a set of rules for every part of your trading system or strategy. To become a profitable trader you will need to create an edge over the market that makes sure after all your wins and losses you come out in front.

A trading plan will make sure you can create this edge and you are following the same rules every single trade, not just gambling and guessing. PDF Download: Get Your Free Trading Plan and Checklist Here. Your trading plan does not need to be an elaborate or complicated document. It does however need to cover and go through all the rules of your trading system or strategy. The best trading plans are often the simplest.

The reason for that is because you want to have very clear-cut and simple trading rules that are easy to follow time and time again. As we are about to go through in just a moment, you need to write down and plan out every part of your trading. This includes everything from the markets you trade, the times you trade them, how you trade them and what exactly your trading strategy looks like. The more clear-cut and simple your trading plan is, the more you will benefit from it. Also keep in mind that your trading plan is not something that will be set in stone.

As you continue to get better as a trader and learn new strategies you will continue to update it. As the markets change and your personal style changes so will your plan continue to evolve. The first thing you will need to think about when creating your trading plan is your overall trading outline. What are your trading goals? What are you trying to achieve? And what is the main focus? The reason these types of questions are important is because it will help you create a trading plan that is personalized for you and your trading style.

For example, are you a conservative trader who only wants to make the best trades and is happy with smaller profits? Or, do you want to look for higher risk trades and are more suited to scalping the markets on the smaller time frames looking for bigger gains? Below I have gone through an example Forex trading plan template that you can use to help create your own trading plan.

This template will help you think about the sort of questions and rules you need to create in your own trading plan. You can also download a PDF of the trading plan template below. Here are some of the things you will want to think about and add into your own trading plan;. Whilst a trading plan covers your whole trading strategy and the rules you will use overall, a trading checklist can make sure you stay within these rules on each individual trade. You can use a quick trading checklist beside your computer to make sure each trade you take fits the rules you have created.

These checklists can be incredibly useful and act as a very quick way to make sure you are staying on track. Below is an example of what you could include in your own trading plan checklist. You can also download a PDF trading plan checklist below to help you create your own. A trading plan and trading checklist does not have to be a huge page document. As we have just gone through you can create a one page simplified trading plan and turn it into a PDF that you sit beside your computer.

This along with your trading checklist will make sure you stick to your trading rules and stay on track. You can access and download the one page trading plan example and trading checklist to help you create your own using the button below. I hunt pips each day in the charts with price action technical analysis and indicators. My goal is to get as many pips as possible and help you understand how to use indicators and price action together successfully in your own trading.

Skip to content. NOTE: Get Your Free Trading Plan Templates Below. Table of Contents. Pip Hunter I hunt pips each day in the charts with price action technical analysis and indicators.

I do not see the setups and entry triggers, exactly as specified in my plan. These companies service fees. Get free access to our Trade Room Join now. The most liquid currency pairs are therefore the ones in high demand. What is a Trading Plan? The longer you are in the market the greater the chance something will go wrong.

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