⚠️ Risk warning: CFDs and leveraged forex are complex instruments with a high risk of losing money rapidly. Most retail accounts lose money. This content is education only, not investment advice or a recommendation.
A trading plan is a short written document that answers, in advance, the questions you would otherwise answer on impulse. It does not predict the market. It decides how you behave in it, so that one bad day cannot turn into a bad month.
The six parts of a plan
- Markets and sessions. Name the few instruments you trade (for example gold, EUR/USD and Saudi Aramco) and the hours you are at the screen. Fewer markets means you learn how each one behaves.
- Timeframes. Your higher timeframe for direction and your lower timeframe for entries, as in the multi-timeframe lesson.
- Setup. The exact conditions that must be true before you enter, written so that someone else could check them on a chart.
- Risk. The share of your account you can lose on one trade, the most you can have at risk across all open trades, and daily and weekly loss limits.
- News rule. What you do before and after high-impact releases on the economic calendar: stay flat, reduce size, or wait for the first candle to close.
- Management and review. Where the stop and target go, whether you ever move the stop, and when you review your journal.
Risk numbers you set once
Many educators suggest risking a small, fixed share of the account per trade, often between 0.5% and 2%. The exact number is your choice; what matters is that it is written down and does not change with your mood. Add a maximum open risk (for example, no more than 3% at risk across all trades at once) and loss limits (for example, stop for the day after losing 2% and for the week after 4%).
Account: USD 10,000. Risk per trade: 1%, so USD 100. Gold setup: entry 2,400, stop 2,388, a distance of 12 dollars per ounce. Each ounce gains or loses 1 dollar for every 1 dollar move, so the loss at the stop is 12 dollars per ounce and the size is 100 ÷ 12 ≈ 8 ounces (0.08 lots where 1 lot is 100 ounces). Daily loss limit: 2%, so after two full losses you stop for the day. Check contract sizes on your broker’s specification and use the calculator.
Write it so it can be checked
“Buy when the trend looks strong” cannot be checked. “Buy EUR/USD only when the 4-hour chart makes higher highs and higher lows, price pulls back to a support zone, and a 1-hour bullish candle closes above the zone” can. If you cannot test a rule on past charts, it is not yet a rule. The setup and backtesting lesson shows how to test it before risking money.
Review: the plan is a living document
Once a week, read your journal and ask two questions: did I follow the plan, and did the plan work? Keep them separate. A losing trade that followed the plan is not a mistake; a winning trade that broke it is. Change the plan only after a review, never in the middle of a trade. The journal and review lesson has a template.
This lesson is educational. It is not advice to trade, and no plan removes the risk of losing money with leveraged products.
🛠️ Practice task
Write your plan on one page. This is for practice, not for placing a trade.
- List at most three instruments you will trade and the hours you can be at the screen.
- Write your higher and lower timeframes and your setup as three to five checkable conditions.
- Choose your risk per trade, maximum open risk, and daily and weekly loss limits, as percentages.
- Open the economic calendar and write your rule for high-impact releases in your markets.
- Mark a weekly review time in your calendar and decide what you will look at in your journal.
✍️ Quick quiz
Check what you learned. Your answers stay in this browser.