How To Create A Trading Plan

You've started expressing an interest in trading and realize you need a trading plan to get started. Or you're already trading but don't have a plan in place yet.

Well, this guide will teach you how to create a trading plan & what to include in it.

You'd be quite surprised how many people don't have even a basic plan. Imagine for one moment, you start trading and have no written plan on what your strategy is, how you are going to trade and what goals you've set.




Fail to plan, plan to fail.


It really is a great quote. We are already set up for failure if we enter the markets with no plan. It's like trying to drive a car blind. Why would anyone do it?

Yet so many of us have dived head first into the world of trading with no goals, trading strategy, methods for journalling, anything at all !

Don't be that person.

But not to fear, the template I've created is a simple guide of what needs to be included in any trading plan. 

There is also a download link for a PDF template of a trading plan to help guide through it.

Trading plans are by far one of the most important aspects of a traders journey. It is essentially the foundation building blocks on your way to successful, consistent profitability.


Avoid Potential Failures In Advance

The level of detail in my own plans are so informative that even if my power fails, I know exactly what I need to do.

You are not going to think effectively when you have a big sized trade on and all of a sudden the power goes out.

These plans are safeguards against yourself and emergency guides in all scenarios traders will face.

 You will always be evolving the plan  as you get more details on your trading style, weaknesses etc.

Below is a basic trading plan and what should be included in it.


What is my strategy?

Entry Criteria

Here fill out in detail the entry parameters for your trading strategy. Be very specific and detailed about what you need to do for entry into a trade.


 Money Management

Here fill out what you plan to do when in the trade. e.g.when price moves a certain amount with or against me, I will trail stop etc. if my trade is not doing anything for x number of days I will move my stop.

Exit Criteria

Detailed notes on how you plan to exit a trade, where your stop out exits and take profit exits would be based on your own trading strategy. Also if you have a trailing stop, when you would move it up/down etc.


Risk Management

What is your risk tolerances within your strategy. Don’t just say you’ll risk 2% or whatever. be way more detailed. e.g if my account drawdowns a certain amount, I’ll reassess things. If you  lose X number of trades in a row, I’ll do something to adjust. Be as detailed as possible. The more data you have, the easier this is to make adjustments too.


How can I improve my psychology for trading?

Here you write a detailed plan on how you plan to improve your mindset and get in the zone. Trust me, this is important. You might spot patterns e.g. “ I get emotional if I have a loss and revenge trade.” Spotting these patterns are crucial to fixing them and improving.

It can be divided into sub categories to fill in.



As mentioned above, work on figuring out your weaknesses as develop a plan to try fix them.

  • Self Sabotage

Do you suffer from FOMO (fear of missing out) or other things that are affecting your trading mindset.

  • Personal conflicts

Every trader has conflicting parts. e.g. time in front of screens vs time with family.

Its important to understand that it will happen and make a plan on how you want to ensure the best possible solution. This will become a problem with your trading and definitely cause damage to your pnl.


What are my goals?

This can be divided into 3 categories

  • Process Oriented Goals

Here, you will write what your plan is to improve your trading process.

e.g. develop a timetable for your day. get structured and figure out a good time to take a break away from screens.

  • Profit Oriented Goals

Honestly, I was reluctant to put this in and it can be very dangerous for your mindset if you don’t hit your planned profit goals. But having some sort of plan on what kind of returns you realistically can achieve gives you something to work towards.  Don’t be disappointed if you don’t achieve them, we have all failed along the way.

  • Education Oriented Goals

What are your plans on improving your education of trading. It could be, you’ll read a trading book once a month or week. You’ll do a course and improve etc. You’ll join a trading room. Whatever is unique to you.

Some recommended reading if you want in picking books


When to update your trading plan?

Write when you plan to update your plan either when you hit your profit goals or if you think you need to amend something. It’s completely subjective.


That's it! I hope this gives you an idea of where to start. Treat trading like a business. All good companies have business plans. Look at this as your trading business plan and improve yourself and your business over time.

As you develop and get more advanced as time goes on, you'll be able to add things to your plan or take away other areas you feel are no longer necessary. This template is the bare bones of a trading plan and something you can build on in the future.

My own trading plan has taken years to get to where it is now. Through trial and error, I've been able to refine it and improve areas to get it to where I want it to be. You can too with hard work.


The importance of testing 

Some people argue that simulated trading is pointless as there is no real money on the line and others will swear by it.

I can only speak from my own experiences and it really helped me. Why? Because I was able to make my trading plan more advanced and detailed without having lost a single dollar.

Simulated trading helped me make tweaks to my trading plan and journal before putting real money on the line.

Psychologically for me, this was huge as my plan was more advanced and I had good information in it without having lost a dollar.


Following your plan

If you study highly successful people, you'll notice that they have the ability to be extremely disciplined in their chosen fields. It is no different in trading.

The hardest part by a mile isn't creating the plan, it's having the discipline to follow it. I don't know how many people I've spoken with who have a great trading plan but simply lack the discipline to follow it.

The best thing to do is figure out whats causing you to not follow your plan. You can do this by reading your journal and spotting patterns that might shed some light on it. Then, adjust and try again.

Let me repeat this again so it sticks in your head. The hardest part is staying disciplined so maybe prepare ways you can help yourself to stay focused and following your rules religiously.

One final point to note is just because you have a trading plan in place, it doesn't mean you will automatically be profitable.

You're just on the right step to getting there.

You may also enjoy reading Getting Started In Trading

Stay disciplined and hope the template helps



Two Step

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