Educational content only, not financial advice. Trading forex and CFDs on margin carries a high risk of loss and is not suitable for everyone.
Most traders who struggle don’t have a strategy problem. They have a plan problem. Without written rules, it is easy to trade on emotion: chasing moves, moving stops and risking too much after a loss. A trading plan is a short document that answers every important question before you trade.
1. Your Goals and Limits
Write down realistic goals and the time you can commit. Are you trading a few hours a day, or checking charts once in the evening? Your schedule decides which style suits you. Compare styles in Scalping vs Swing Trading.
2. Markets and Timeframes
Choose a small number of pairs to focus on, such as EUR/USD, GBP/USD and USD/JPY, and the timeframes you will use. For example, use the daily chart for direction and the 4-hour chart for entries.
3. Your Strategy Rules
Describe your setup clearly enough that someone else could follow it:
- What conditions must be present? (For example: an uptrend on the daily chart.)
- What triggers an entry? (For example: a bullish candle after a pullback to support.)
- What makes you skip a trade? (For example: high-impact news within the next hour.)
Not sure which strategy to use? Start with our guides to Trend Following, Breakout Trading and Range Trading.
4. Risk Management Rules
This is the most important section.
- Risk per trade: many traders risk 1% or less of their account on a single trade.
- Stop-loss: every trade has a stop, set before entry and never moved further away.
- Minimum reward: for example, only take trades with at least 2 times reward for the risk (see risk-reward ratios).
- Daily or weekly loss limit: for example, stop trading for the day after losing 3% of your account.
- Leverage: know how much you are using. Read How Leverage and Margin Work.
5. Trade Management
Decide in advance how you will handle open trades. Will you use a fixed target, a trailing stop or a partial exit? Will you close trades before weekends or major news?
6. Your Trading Journal
Record every trade: the date, pair, setup, entry, stop, target, result and how you felt. After 20โ30 trades, review the journal to see what works and what doesn’t. This is how a plan improves over time.
Simple Trading Plan Template
- Pairs I trade: ______
- Timeframes: ______
- Strategy and entry rules: ______
- When I don’t trade: ______
- Risk per trade: ___% Daily loss limit: ___%
- Minimum risk-reward: 1 : ___
- Exit method: ______
- Review schedule: every ___ trades / weeks
Print it, keep it next to your screen, and follow it. Avoiding the most common beginner mistakes is mostly about sticking to your own rules.
Risk Reminder
No strategy wins every time. Test any approach on a demo account first, risk only a small percentage of your account on each trade, and read our Risk Management guide before trading live.