How to Write a Trading Plan (With a Free Template)
How to write a trading plan on one page: the ten sections, a filled-in forex example, a free template, and how to test and revise it each month.
Most traders can describe their method in a sentence. Very few can show it to you on paper, and that gap is where most bad trades start: a rule remembered loosely, bent a little, then broken. This guide shows you how to write a trading plan that closes the gap.
Quick answer: To write a trading plan, put ten decisions on one page before your next trade: which markets, which hours, which timeframes, your setup, entry, stop and target rules, risk per trade, a daily loss limit and a review routine. Write each as a number or a yes/no condition, test it on fifty trades, then revise it monthly.
What is a trading plan, and why write one?
A trading plan is a short written document that makes every decision a trade needs before the trade exists. One page is the right length. If it runs to five, you will not read it before each session, and a plan you do not read is a plan you do not follow.
It helps to separate three things that often get muddled. Your strategy is the setup: the pattern on the chart that gives you a reason to trade. Your plan wraps the strategy in everything else: the hours, the risk, the limits and the review. Your journal records what actually happened. Many beginners have a strategy and call it a plan, which is why their risk rules live only in their head.
The real reason to write it down is timing. Every trading decision is made either calm, with no position open, or under pressure, with money moving. The second state overrates the setup in front of it and finds reasons why today is different. A written plan moves the hard decisions to the calm state, and leaves the pressured state with only simple yes/no checks to make.
A plan also makes your results mean something. If your rules shift from week to week, fifty trades tell you nothing because they were fifty different methods. That is the link between this article and our guide to keeping a trading journal: the plan says what you intend to do, the journal says what you did, and the gap between the two is where you improve.
None of this makes trading safe. When the European Securities and Markets Authority restricted retail leverage in 2018, it cited evidence that 74% to 89% of retail accounts lost money (ESMA). A plan does not change the odds of a single trade. It limits what a bad run, or a bad mood, can cost.
How to write a trading plan: the ten sections
A complete forex trading plan answers ten questions. They fall into four groups: where and when you trade, the trade itself, what you can lose, and how the plan improves. The Academy lesson on writing a trading plan uses the same ten, so you can move between the two.
1. Markets: what you trade
Name the pairs, and keep the list short. Two or three major pairs are plenty while you are learning: each has its own rhythm and news, and majors have the tightest spreads. Note which of your pairs tend to move together: EUR/USD and GBP/USD often do, so two trades on them can be one bet on the dollar placed twice. The lesson on correlation risk explains how to count them.
2. Times: when you trade
Write the exact hours in your own time zone and the days of the week. “When I have time” is not a rule. Choose a window when your pairs are active and you can actually be at the screen. Our guide to forex market hours shows which session suits which pair. Add a news rule too: for example, no new trades in the 30 minutes either side of a high-impact release on the economic calendar.
3. Timeframes: higher, working and entry
Most plans use three timeframes: a higher one for trend and key levels, a working one where setups form, and a lower one for the entry. D1, H4 and H1 is a common set for part-time traders; H4, H1 and M15 suits people with more screen time. Fix them so you do not drift to a smaller chart when bored. The lesson on multi-timeframe analysis and our guide to forex timeframes cover how they fit together.
4. Setup: what must be true before you look for an entry
This is your strategy, written as a short list of conditions that must all be true: for a trend-pullback trader, a trending daily chart, a pullback into a marked daily level and a rejection candle there. Each must be checkable on a chart.
5. Entry trigger
The setup tells you to pay attention; the trigger tells you to act. Write the exact event: “buy when an H1 candle closes above the high of the rejection candle”. Also write what cancels the trade, such as “no trigger within four H1 candles”. Otherwise old setups get taken late at worse prices.
6. Stop-loss rule
Your stop loss goes where the trade idea is proven wrong, usually just beyond the swing that defines the pattern plus a small buffer, never at a comfortable round number. Add one more rule: the stop is never moved further away. Our guide to where to place a stop loss and the lesson on stop-loss placement go into the detail.
7. Target rule
Say where profits are taken: usually the next significant level on the higher timeframe. Then set a minimum reward-to-risk ratio below which you skip the trade, commonly 1.5:1 or 2:1. At 2:1, you need to be right only one time in three to break even before costs, which our guide to the risk-reward ratio explains.
8. Risk per trade and total open risk
State your risk per trade as a percentage of current equity, typically 0.5% to 1% while you learn, and a cap on total open risk across all positions, such as 3%. Then add the rule that links them: position size is calculated from the stop distance, every time. Our guide to position sizing in forex shows the formula, and the lesson on risk per trade explains why small numbers survive losing streaks.
9. Daily loss limit
A daily loss limit is the loss at which you close the platform for the day, expressed in money, in trades or both: for example “two losses or −2%, whichever comes first”. It is the rule that stops one bad morning becoming a bad month, because the third and fourth trades after two losses are where revenge trading lives. Many traders add a weekly limit as well.
10. Review routine
Write when you record trades and when you read them back: journal every trade the same day, review the week at the weekend, and review the plan itself once a month. This is what makes the plan learn; it gets its own section below.
How to turn vague rules into rules you can follow
Most first drafts of a trading plan are full of good intentions: trade with the trend, be patient, do not over-risk, stop when tired. Every one of those is sensible, and none of them is a rule, because none can be checked. In the moment, under pressure, a vague rule always gets interpreted in favour of taking the trade.
A simple test helps. Could two strangers look at the same chart and the same account and agree, without discussion, whether the rule was met? “The trend is up” fails; one person sees a trend, another sees a range. “D1 has made a higher high and a higher low in its last two swings” passes. Rewrite every line of your plan until it passes.
Watch for warning words as you edit: strong, good, clear, usually. Each hides a judgement call that will be made at the worst moment. Some judgement is unavoidable, but narrow it in advance: “a rejection candle has a lower wick at least twice its body” gives your journal something precise to measure.
The same applies to the risk lines. “Be careful with size” is a wish. “Risk 1% of current equity, size calculated from the stop, round the lot size down” is a rule that leaves nothing to negotiate. Round down, because rounding up on every trade is a quiet way of risking more than your plan says.
A trading plan example, filled in
Here is a complete trading plan example for a part-time trader in the UK with a $5,000 account who trades before work. It is version 1.2; the version log further down shows how it got here. Treat it as a model of the format, not a strategy to copy.
| Section | Rule |
|---|---|
| 1. Markets | EUR/USD and GBP/USD only. Both open at once count as one dollar position. |
| 2. Times | 08:00–11:00 UK time, Monday to Thursday. No entries 30 minutes either side of a high-impact release. |
| 3. Timeframes | D1 for trend and levels, H4 for setups, H1 for entries. |
| 4. Setup | D1 trending (two higher highs and higher lows, or the reverse) + H4 pullback into a marked D1 level + H1 rejection candle at that level. |
| 5. Entry | H1 close beyond the rejection candle’s high (or low for sells). Cancel if no trigger within four H1 candles. |
| 6. Stop | Beyond the H4 swing that defines the pullback, plus 4 pips. Never widened. |
| 7. Target | Next D1 level. Minimum 2:1 reward-to-risk, or no trade. |
| 8. Risk | 1% of current equity per trade, size from the stop, lot size rounded down. Total open risk 3%; both pairs together 1.5%. |
| 9. Daily limit | Two losses or −2%, whichever comes first, then stop for the day. Weekly limit −4%. |
| 10. Review | Journal every trade in R the same day. Weekly review on Sunday. Plan review on the first Sunday of each month; one change at most. |
Almost every cell is a number, a named level or a yes/no condition. Nothing is left to decide in the moment; it was all settled on a Sunday.
In practice, the plan works as a gate. Before any order you walk through it from the top, and a single “no” ends the process. Check the cheap questions first, so you never analyse a chart outside your hours.
Here is the example plan applied to one trade. The reward-to-risk tool below holds the same entry, stop and target, and shows the win rate the trade needs to break even.
Break-even win rate = 1 ÷ (1 + R), where R is the reward-to-risk ratio. Costs push the real figure a little higher.
The plan did not predict where EUR/USD would go. It decided whether this was a trade, and what it could cost.
Free trading plan template: write yours here
You do not need special software for a trading plan template. Paper works, and so does the fillable version below with the same ten sections. It saves in your browser as you type and downloads as a text file you can print.
My trading plan
Saved automatically in this browser. Download a copy and keep it where you can see it while you trade.
If you prefer a document or a spreadsheet, copy this blank template and keep each answer to one or two lines.
| Section | The question it answers | Your rule |
|---|---|---|
| 1. Markets | Which pairs, and which of them count as one position? | |
| 2. Times | Which hours, in my time zone, on which days? What is my news rule? | |
| 3. Timeframes | Higher, working and entry timeframe? | |
| 4. Setup | Which conditions must all be true? | |
| 5. Entry | What exact event triggers the order? What cancels it? | |
| 6. Stop | Where is the idea proven wrong? Plus what buffer? | |
| 7. Target | Where do I take profit? What is my minimum reward-to-risk? | |
| 8. Risk | What % per trade? What total open risk? How do I round? | |
| 9. Daily limit | At what loss, or how many losses, do I stop for the day and week? | |
| 10. Review | When do I journal, review the week and review the plan? |
Write a version number and the date at the top: “v1.0, 1 March”. Then read the plan before every session. It takes two minutes, and it is the difference between a plan and a document you once wrote. The Academy lesson on building a routine shows where that reading fits in your day.
How to test a trading plan before you trust it
A freshly written plan is a hypothesis, and nothing you feel about it tells you whether it has an edge. Test it in three stages.
Stage 1: a manual backtest. Scroll back through your pairs’ charts and find every place your setup appeared, using only the information visible at the time. Record each one as if you had traded it: entry, stop, target, result in R. Aim for at least fifty examples. It is slow, and it quickly exposes any rule vaguer than you thought.
Stage 2: a forward test on demo. Trade the plan on a demo account for one to two months, at the account size and risk you intend to use for real. A backtest shows whether the setup worked; a demo shows whether you can follow it in real time. Our guide to using a forex demo account covers how to make it realistic.
Stage 3: live, small. Move to real money at reduced risk, such as 0.5% per trade, and keep journalling. Real money changes behaviour.
At each stage, measure three numbers. Plan adherence: the share of trades that followed every rule. Below about 90%, you are not yet testing the plan; you are testing your impulses. Expectancy: your average result per trade in R. If 50 trades include 20 winners averaging +2R and 30 losers at −1R, that is (40 − 30) ÷ 50 = +0.2R per trade, before costs. Maximum drawdown in R: the deepest fall from a peak, which tells you what the plan will feel like on a bad month. Our guide to trading expectancy explains the first number in more depth.
Expect the results to be lumpy. The simulator below runs a hundred trades for a plan with exactly that profile: 1% risk, a 40% win rate and 2:1 reward-to-risk. Run it several times.
Each run uses the same settings with different luck. Run it several times: the shape changes, the drawdowns don't go away.
Every run has the same positive expectancy, and every run has losing streaks; six or more losses in a row is normal over a hundred trades at a 40% win rate. That is why the risk lines in section 8 must be small enough to sit through those runs. The lesson on the maths of drawdowns shows how quickly larger risk turns a normal streak into a deep hole.
How to review and revise your trading plan each month
A plan that never changes does not learn; one that changes weekly cannot be measured. Use a fixed rhythm: trade the current version unchanged for a month, review it once, change at most one rule, give the new version a number, and start again.
Set aside an hour on the first weekend of the month. Read every journal entry from the month, then work through the checklist below. It saves in your browser, so you can reset it and reuse it each month.
Monthly trading plan review
0 of 7
Three rules keep revisions honest. Change one thing at a time, or next month’s results cannot tell you which change helped. Require evidence: a pattern across twenty or more trades, not one painful loss. And never loosen a rule during a drawdown. The only changes allowed mid-slump are ones that reduce risk, such as cutting risk per trade until you recover.
Keep a short version log at the bottom of the plan. Here is how the example plan above reached version 1.2:
| Version | Change | Evidence from the journal |
|---|---|---|
| v1.0 | First plan: 08:00–12:00 UK, minimum 2:1 | None yet |
| v1.1 | Window cut to 08:00–11:00 UK | 22 trades after 11:00 averaged −0.4R |
| v1.2 | No entries 30 minutes either side of high-impact news | 4 losses beyond −1.2R, all during releases |
The log stops you reversing a change you made for a good reason, and shows that the plan is improving for reasons you can name.
What would you do?
Week three of version 1.2. You have just taken your fifth loss in a row. All five followed the plan, each lost about 1R, and the account is down 5%. What do you do?
Common trading plan mistakes
Writing a strategy and calling it a plan
A page that describes only the setup, entry and exit is half a plan. The sections people skip, risk, daily limit and review, are the ones that decide whether a losing run costs 5% or 50%. If your plan has no numbers in it, start there.
Making it too long to read
Ten pages of market philosophy will not be read at 07:55. Keep the rules to one page; if a line does not change what you do, delete it.
Including income targets
“Make $500 a month” is not a rule you can follow; the market decides that. Income targets push you to overtrade when you are behind and take more risk at exactly the wrong time. Your plan controls inputs: setup, size and limits.
Editing the plan mid-session
Changing a rule while a trade is open, or right after a loss, is giving yourself permission to break it. All changes wait for the monthly review, where you are calm and the evidence is in front of you.
Writing it once and never reading it again
A plan in a drawer protects nobody. Read it before every session and record against every trade whether you followed it. That yes/no field is why the journal lesson belongs beside this one.
Frequently asked questions
What should a trading plan include?
A complete trading plan covers ten sections: the markets you trade, your trading hours, your timeframes, your setup, entry trigger, stop-loss rule and target rule, your risk per trade and total open risk, a daily loss limit, and a review routine. Each should be written as a number or a yes/no condition you can check.
Is there a free trading plan template?
Yes. The fillable template on this page has the same ten sections, saves in your browser and downloads as a text file you can print. You can also copy the blank table into a document or spreadsheet.
How long should a trading plan be?
One page is right for most traders. Long enough to cover all ten sections, short enough to read in two minutes before each session. If yours is longer, move background notes elsewhere and keep only the rules.
How often should I update my trading plan?
Review it once a month and change at most one rule per review, backed by evidence from twenty or more journalled trades. Keep a version number and a short log of each change. Never loosen a rule mid-session or during a drawdown; only changes that reduce risk should happen between reviews.
What is the difference between a trading plan and a trading strategy?
A strategy is the setup: the conditions on the chart that give you a reason to trade, with an entry and exit. A trading plan contains the strategy and adds when and what you trade, how much you risk, when you stop for the day and how you review results.
Do I need a trading plan for a demo account?
Yes. A demo account is where you find out whether you can follow your plan in real time, so trade it with the same rules, account size and risk you intend to use with real money.
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