Trading Plan

What is a trading plan?

A trading plan is a written framework you prepare before trading. It tells you what you may trade, when you may act, what conditions must be present, how risk and exits are planned, and what you will record afterward.

The plan guides your decision. It does not predict the next market move or guarantee a result.

What belongs in a trading plan?

1. Market and session: the instruments and trading window you chose.
2. Setup: the named situation you are waiting for and the conditions that define it.
3. Entry: what must happen before you can act.
4. Risk: the planned stop loss, USD loss limit and position-sizing method.
5. Exit or trade management: what your plan allows after entry.
6. Record and review: what you will save in your trading journal and check later.

A simple fictional XAUUSD plan

Imagine you trade XAUUSD during your planned London session. Your setup is a breakout and retest of the Asian high.

• Entry condition: wait for a candle to close above the Asian high, then wait for the retest confirmation already written in your plan.
• Risk check: set the stop and calculate position size from your chosen USD loss limit before entry.
• No-trade condition: if a required condition is missing, this setup does not qualify under your plan.
• After the trade: record the original plan, what you did, the result and whether you followed the rule.

This is a fictional teaching example. It is not a live setup or a signal.

Plan, rule and checklist: what is the difference?

• Trading plan: your complete written framework.
• Rule: one checkable condition inside the plan. Rule-based trading means using those predefined conditions during a decision.
• Checklist: the short list you use before one considered trade. Your pre-market routine may prepare that checklist before the session starts.

A plan can still contain judgment. The useful question is whether you wrote clearly enough to check the decision later.

Does a winning trade prove that you followed the plan?

No. A winning early entry can still be marked plan not followed. A losing trade can still match every written condition. Profit or loss tells you the result; setup compliance checks whether the recorded decision matched your plan.

What changes for a prop-firm account?

Firm rules can differ by program, account stage and review period. Copy the exact current rule that applies to your account into your own plan. Do not rely on a universal percentage, trade limit or reset time.

What should you do next?

Write one setup in six lines: market, session, setup, entry, risk and record. Check whether each line is clear enough to answer yes, no or not applicable before the next planned trade.

The trading rulebook guide shows the full writing process. Use the trading discipline checklist for the short pre-trade check and the trading discipline guide for the wider system. After the trade, use a trade review to compare the record with the original plan.