How to write a trading plan — step-by-step template

A usable trading plan answers concrete questions before the next order: which setup qualifies, how size is calculated, when a position is closed, and what happens after a limit is reached. This seven-section template turns those decisions into rules you can compare with the trade record. Writing them down makes deviations visible; it does not guarantee a profit.

Make decisions and changes traceable

A versioned plan states intended decisions and conditions for declining or stopping them. IG Academy discusses time, capital, markets and records; the seven-section template below adds operational checks. It does not guarantee discipline, an emotional response or a positive edge.

Keep rule quality separate from execution. A loss under the plan is different from an unintended order, and a profitable deviation is still a deviation. Retail-CFD loss warnings do not establish a causal comparison between traders with and without written plans. Adequate records can help diagnose differences without guaranteeing an exact answer after one quarter.

Trader profile and financial goals — section one

Record account, instrument scope, test/live mode, available time and version. Separate process goals, such as logging each submitted instruction, from a desired return that depends on uncertain market outcomes. A profit target is not a reason to force another entry.

On a fictional fixed 10,000 USD reference, an annual 12% goal is 1,200 USD; a 3% quarterly amount from that same reference is 300 USD. These are desired amounts, not observed returns or low-risk estimates. Four compounded 3% quarterly gains would instead give 1.03⁴ − 1 ≈ 12.55%, so specify whether amounts use a fixed base or current equity.

Markets, instruments and timeframes — section two

Record which instruments and data intervals the rule uses and why their trading hours and contract quantities are operationally feasible. No universal three-to-five-pair limit or three-timeframe structure establishes an edge. Keep the data feed and timestamp conventions explicit.

• Instruments: exact symbols, contract quantities, account restrictions and source of data.
• Data intervals: what each observation contributes and when its final values become available.
• Hours: named clock, entry cutoff, exits, breaks and daylight-saving handling. Outside-entry hours do not automatically justify closing needed terminal automation.
• Events: specified releases, exact exclusion/reassessment windows and handling of open positions. A two-hour buffer is a chosen parameter, not a universal rule.

Entry and exit strategy — section three, the heart of the plan

A precise fictional signal is: after H1 closes, its Close must exceed the greatest High of the twenty preceding completed H1 bars from the same feed, excluding the signal bar. The decision is possible only after that close. This is an illustration parameter, not a verified profitable strategy.

A signal still needs an entry instruction, permitted fill prices, units, expiry and exclusions. Decide whether a changed quote requires resizing or rejecting the order. A later submission does not automatically receive the historical signal Close. Include partial fills, cancellation confirmation and invalid data.

Specify initial protection, target, time limit and precedence, including exact units for any partial exit. If a time deadline arrives after a reduction, act on actual remaining quantity. An alert is not closure confirmation, and a scheduled exit before a trading break needs a procedure for missing or rejected execution.

Money management in the plan — section four

Separate a planned loss budget from maximum possible loss and required margin. Define the monetary reference, sizing formula, fees and combined exposure before submitting. A limit on position count alone does not detect shared currency exposure.

Choose and record six risk constraints: the per-trade planned budget; the sizing formula with pip value, currency conversion and costs; the combined budget for open positions; the daily and weekly decision limits; and the maximum number of simultaneous positions. State the equity or balance reference for each percentage. Correlated positions need an exposure review, and a daily decision limit is not a broker guarantee that realised losses will stop at that amount.

For a hypothetical fixed USD 10,000 reference balance, a plan might specify 1.5% per trade (USD 150), a 5% combined planned budget (USD 500), a 4% daily decision limit (USD 400) and a 9% weekly limit (USD 900). These are illustrative settings, not recommended universal levels. Define which losses and costs count, how the reference balance is updated, and which actions follow a breach. Closing the platform alone does not close existing positions or cap their losses.

For a separate fictional EUR/USD example, equity is 12,000 USD and the chosen planned budget is 60 USD, or 0.5%, not a recommendation. Assign entry Ask 1.1002, Bid 1.1000 and ordinary SL 1.0962. Distance is 0.0040 USD/EUR, or 40 pips. Commission is 0.0001 USD/EUR on entry and exit, with no minimum. Planned loss for N EUR is N × (0.0040 + 0.0002).

N = 60/0.0042 ≈ 14,285.71 EUR. With the assigned minimum and step both 1,000 EUR, round down to 14,000: price loss 56 USD plus 2.80 commission = 58.80. The next step, 15,000, costs 63 USD and exceeds the budget. Check actual quantity, contract, stops-level and margin constraints; if minimum quantity exceeds the budget, skip rather than move the stop merely to permit entry.

All rows assume exact stated fills and closure before funding, with no conversion or additional charges. Gross result is N × (Bid exit − Ask entry); spread is already included. Worse stop execution exceeds the 60 USD budget: a planned amount is not an assured cap.

Psychology and discipline in the plan — section five

Record conditions that make required actions unworkable and the response to each, rather than assigning every trader the same emotional blockers. A pause must also deal with live positions and pending orders. A documented emergency response can require action before a planned review date.

• Pause conditions: define the observation and action, including inability to monitor, unreliable data or a rule deviation.
• Measurement: specify start time/clock, currency, realized and unrealized P/L, included costs and treatment of deposits/withdrawals.
• Open exposure: state which pending orders to cancel, which positions to reduce or close and how to confirm execution.
• Outage: record a provider contact channel and order/position identifiers. Check account status before repeating an instruction of uncertain status.
• Record: preserve every deviation regardless of its profit. A chosen pause duration or threshold is not a universal psychological treatment or loss guarantee.

The review process — section six

Define regular reviews and earlier intervention conditions. Separate the plan’s rules from a checklist for one decision and a journal of its execution. Preserve the version assigned to each position and any policy for applying revisions to already open exposure, as the unchanged diagram shows.

A separate fictional day starts at equity 12,000 USD with no positions, receives a 500 deposit and ends at 12,410. Equity rises 410, but trading P/L is 12,410 − 12,000 − 500 = −90 USD, assuming no other flows. Closed positions lose 40 and open marks lose 50; costs are already included. A chosen 80 USD pause threshold counting both has been reached despite the deposit. It does not guarantee eventual loss stops at 80.

Review signals, intended/executed units, prices, costs, time and deviations. Archive old versions, state why rules change and evaluate new ones separately from data used to tune them. A data fault or contract change may require stopping immediately rather than waiting for a quarter.

Tools and five common mistakes

List the provider/account, platform and automation location, calendar, data sources, sizing tool and record system, including outages and alternatives. Check their actual product coverage and behavior rather than assuming named applications guarantee accuracy or save a fixed number of hours.

Check five concrete omissions: unclear version/scope, an ambiguous signal, sizing that omits costs or quantity steps, a pause leaving orders unmanaged, and revisions that overwrite history. Document length is an operational choice, not a universal one-to-three-page optimum. A concise plan still needs complete definitions.

What to do tomorrow

1. Fill the seven sections with checkable scope, data, times, orders, units, costs, pause and review rules. Treat blanks as unresolved decisions.
2. Test rule logic and rehearse execution separately. Preserve versions, fills and deviations; a month of demo does not automatically establish readiness or profitability.
3. Schedule reviews plus fault/contract-change triggers. Define when a revision takes effect and its policy for existing positions; neither quarterly-only changes nor arbitrary pause durations are universal requirements.

Related reading: the pre-entry checklist — the operational tool that enforces the plan's rules before every entry; discipline in trading — how to build a system — the psychological side of sticking to rules you have written down.