Developing Your Own Trading Plan

A trading plan documents your strategy, entry criteria, risk management rules, and review process. It should be written down and followed. A plan reduces emotional decisions and improves consistency.

Four key components: 1) Goals—what you want to achieve (e.g. consistent returns, learning, capital preservation). 2) Rules—when to enter and exit, which pairs and timeframes. 3) Risk—how much to risk per trade (e.g. 1–2%), max drawdown, position sizing. 4) Review—how often you review (weekly/monthly) and what you adjust.

Write it down. Start with your goals and risk tolerance. Define your entry and exit rules clearly. Include your risk per trade and max daily loss. Add a review schedule. Keep it simple: one page is enough. Update it when your strategy or circumstances change.

Common mistakes: not writing it down, making it too vague, ignoring it when emotions run high, or changing it after every loss. A plan only works if you follow it. If you keep breaking it, the plan may need adjustment—but do that deliberately, not in the heat of a trade.