Trading Plan Template

What a Trading Plan Template Should Include

It covers seven aspects. Not having any of them leaves a blank that you will fill out with improvisations in the worst possible moment.

• Goals, stated as behaviour you control rather than an amount of money.

• Markets and trading hours: the instruments, and when you may open a position.

• Setups, listed so that their absence is immediately evident.

• Entry rules, stop and exit points.

• Size and risk limits expressed as percentages.

• Fields to include in a trading journal, chosen beforehand to avoid silently skipping the uncomfortable ones.

• Frequency of reviewing the plan, and criteria for changing it.

When it comes to how to create a trading plan from scratch, a good approach is to set position size and risk parameters first, as they are the only tools that protect you while the rest may still be wrong.

The Core Trading Plan Template

Copy the tables below and add your own values in the third column. Each sample entry is a trading plan example of the specificity to aim for, not an idea to adopt.

Goals and risk tolerance

The third row is the one that is most likely to be skipped. If losing the whole account is a big blow to you, the account is too big, and no further rule of the plan will prevent this.

Strategy and setup criteria

Having more than one strategy per plan is not an option. Using three leaves you without understanding which one disappointed you, and you will adjust all three based on the results of none.

Entry and exit rules

Your entry and exit rules get tested in the most extreme situations, and therefore they should be as mechanical as possible.

That last row is extremely important. Put down that one habit of yours which causes the most problems, and treat every instance of breaking it as a failed trade, no matter how profitable it was.

Position sizing and risk limits

These numbers determine your capacity to withstand bad streaks, and whether a bad run is bad luck or the end of the account. Set your position sizing rules once, in percentages, and keep them unchanged.

• Risk per trade, as a percentage of the account. Many systematic traders keep this between 0.5% and 2%, and the smaller value is safer while your strategy is still untested.

• Maximal risk at any moment. With three open positions, your total open risk should still be a value you set beforehand.

• Daily loss limit: the point beyond which you shut down for the day, as a numerical limit to avoid interpretations.

• Correlation limit. How many open positions may be correlated, as two correlated trades behave closer to one large trade than to two small ones.

• Recovery rule: the size to lower to, and the events needed for the return.

Position size should always be calculated based on the stop, not the other way around. Determining the size first and placing a stop to match it is how 1% risk quietly turns into 6%.

Trading journal fields

Decide these now, while nothing is at stake, as the fields you will try to skip later are precisely those that reveal something.

• Date, instrument, direction and timeframe.

• Screenshot of entry and exit.

• Setup conditions present at the moment of entry: a list of ticks.

• Planned stop and target, determined before the result is known.

• Actual exit and its explanation.

• Did I follow the plan, yes or no, regardless of the result.

The last field is the key one. A profitable trade violating the plan is a problem, a losing trade following the plan is not. Keeping these fields separated lets you evaluate the plan rather than the last outcome.

Forex Trading Plan Template

The forex trading plan template is the core template with four more aspects which are relevant to currency pairs.

• Session rules: which sessions you trade and avoid. The same instrument behaves completely differently in the Asian session and after the London open, and you miss half the context if you skip this part.

• Pair overlap: which pairs you avoid trading at the same time. Some majors share a currency, which means several positions can be the same bet in different clothes.

• Risk in pips and percentage: the percentage determines the size, the pips are the number you see on the chart.

• Calendar and overnight: the fixed window around scheduled data releases when you avoid entering, and whether positions stay open overnight or over the weekend.

Day Trading Plan Template

A day trading plan template must include certain restrictions that longer-horizon plans can skip, as the key risk here is not one trade gone bad but a chain of trades losing one after another within the same session.

• Daily maximum trade count: a limit on the total, won or lost. Without it, a quiet trading day turns into artificial activity.

• Trading window: the interval for opening positions. Many day traders avoid the first minutes after the open, due to widened spreads and hard-to-read direction.

• Daily loss limit, enforced by quitting the platform. The only way this works is when reaching it stops the day, not starts a discussion.

• Flat by the end of the day: no open positions once the trading day is over, without exceptions written afterwards.

• Pre-session routine: several minutes of preparation before the first position.

Keep a short trading plan checklist with you on the screen when trading, with setup conditions as the list of checks. Having to tick them marks the violation of a rule as a deliberate act.

Stock Trading Plan Template

The stock trading plan template includes aspects which do not apply to trading currency pairs.

• Earnings: check the release date before every position. A release can gap the price straight through your stop.

• Overnight: check your exposure to gaps, as shares trade for part of the day while news comes outside trading hours, so your stop protects you less than it appears to.

• Liquidity: a minimum average daily volume, below which you do not trade the shares at all.

• Sector limit: the maximum percentage of the account in one sector, as stocks in the same industry tend to move together.

• Corporate actions: splits, dividends or share issues. They distort price history and make a chart misleading.

The liquidity filter does a quiet job of keeping you out of thin stocks. They can give a clean appearance of a breakout, then refuse to let you out near the price you saw, regardless of how well you planned the entry.

Options Trading Plan Template

An options trading plan template has the highest number of extra fields, as an options position may lose money even if your forecast is absolutely correct.

• Structures allowed: which to trade and which not. The first step is to go for defined-risk positions, where the maximum loss is known when you open.

• Expiry choice rule: what time to select for an expiration, and why. Too short a time, and the position must be right from the very beginning.

• Implied volatility check: whether implied volatility is high or low relative to its own recent range, since the same directional forecast is a good or bad idea depending on what you pay for it.

• Time decay budget: how much you are prepared to lose to the passage of time while the position runs.

• Expiration handling: what you do as expiry approaches, and the maximum loss allowed per structure.

Options reward a plan more than almost any other instrument, as there are more opportunities to fail while trading them. A crypto trading plan template should include the same aspects plus a note on weekend exposure, as cryptocurrencies trade even when you don't. This post explains crypto options trading.

Setting Risk Management Parameters

A risk management plan template is not an independent document. It is two or three risk numbers in your trading plan and a decision related to each of them.

Start from the drawdown you can tolerate, and then work backwards. If eight losing trades in a row will knock you off the course of the plan, then that streak is your real limit, and you should lower your risk percentage. Such streaks are possible even with a strategy that works effectively.

There is also a systematic way of setting position sizes. The Kelly criterion gives the optimal fraction of the account to risk, based on win rate and payoff, and its practical lesson is how aggressive full Kelly is and why most traders use a fraction of it. This tutorial on position sizing with the Kelly criterion teaches the mathematics and shows the limits of the approach as well as the formula.

Two cautions should be included in the plan directly. Every sizing formula depends on estimates taken from a limited sample, and a win rate estimated over 30 positions is quite unreliable. And no sizing formula turns a bad strategy into a good one; it only affects your survival time.

Building a Trading Journal

A trading journal template can be a spreadsheet. One trade per line with every field from the above list appearing in its column, and a weekly review tab included in addition.

The heavy lifting is done by four columns after logging around forty lines. Filter on "did I follow the plan: no" and see how those trades are similar. Group them by setup to find out which appear most often in your winners. Sort by the time of day. Compare the planned exits to the actual ones, which is your discipline score, as clear as it gets.

Perform a weekly review rather than a daily one, as daily reviews react mostly to market noise. Apply all plan changes only at scheduled review moments, never during the session. Note the reasons for the changes as you apply them, since a date-stamped change log reveals whether you learn something or simply react.

Testing Your Plan on the Pocket Option Demo Account

A newly created trading plan has never been tested, and therefore its weakest points are unknown. Finding them on the demo takes you only time. The demo account at Pocket Option comes with a virtual balance of $50,000 and requires no deposit to access, which lets you run the plan at a realistic position size.

Two points to get right. Trade the demo at the same position size as you would live, as a percentage, as otherwise the test gives no valuable insight. And log every trade as if it is a live one. Below about thirty trades, a streak of luck is indistinguishable from a successful strategy.

Forward testing on the demo is half of the picture. Backtesting trading plan rules against historical data is the other half, and it goes faster: you cover months of market conditions in a matter of hours. But there is a trap here, the unintentional tuning of rules to data you have already seen. This tutorial on turning raw ideas into tested plans helps you run the process without deceiving yourself.

There is also a clear limitation. The demo removes the real money, and therefore the money factor affecting your ability to stick to the plan is absent. Strong demo results show your rules are consistent and executable while nothing is at stake. They will not predict how you behave when money is involved.

Moving From Demo to Live Trading

The moment you make the transition, many plans stop being followed, so regard it as a new stage with new rules.

• Set the criteria for entry to yourself: how many trades should be placed, how strict your plan compliance should be, and how thoroughly the journal is kept.

• Start with a position size lower than your plan allows, as you have to feel the difference and understand the consequences.

• Be ready to see your execution deteriorate at first. Hesitating on legitimate entries and taking profits too early are expected, and they tell you something about yourself rather than about the rules you tested.

• Scale up based on compliance, not profitability, as rewarding a rule-breaking month brings the worst result possible.

There are always going to be some losses even with perfect execution of everything on your checklist. A plan will not help you avoid them, and any plan sold on that basis is an oversell. All it does is limit those losses to sizes you predefine.

Common Mistakes When Using a Trading Plan Template

Typical abandoned plans come from typical mistakes that everyone makes.

• Writing rules impossible to break. "Trade with the trend" is an idea rather than a rule, and a rule that cannot be failed cannot be followed either.

• Copying a plan without updating the numbers. There is no chance to survive with numbers tailored for somebody on another schedule with other risk limits.

• Altering the plan every time you lose. One losing trade is not evidence that something is wrong, and altering rules in response never lets you know whether they work.

• Filling the template with more than one strategy. Three strategies give three outcomes you will be unable to distinguish.

• Keeping the sizing open. Any undefined number is left for the last moment, which is what a trading plan exists to prevent.

• Not reading the plan. A quarterly review makes it only a document; a plan read before each session is a procedure.

Conclusion

Write the plan so that it can catch you, then let it.

Regardless of the section, the key points are the same: rules precise enough that failing to follow them is visible, limits as percentages set before the session rather than inside it, and a journal column recording how you obeyed the plan without considering the profitability of the trade. You don't need a smarter strategy. Fill the core template with information that corresponds to your approach, find the variant matching your type of trading, and test it on a demo until the rules stop surprising you. Then go live at a fraction of the allowed size. It will do nothing for comfort and will not remove the losses, but it turns them into a price you set rather than a random outcome.

Disclaimer: The information contained within this article is for informational and educational purposes only and should not be considered as investment advice or a recommendation of any trading strategy. Trading involves a significant risk of capital loss and may not be suitable for all investors, and a trading plan reduces neither that risk nor the possibility of losses. Results achieved on a demo account do not guarantee a similar result in real trading.