Trading plan template: how to build a plan you can follow

What you’ll learn

• The seven sections a trading plan should cover
• How to write entry rules precise enough to be tested
• Why exits should be defined before entries
• How to set a review cadence that improves the plan without over-fitting
• How to translate a broad idea into a step-by-step testable sequence
• The arithmetic that connects your stop distance to your position size
• Common plan-writing mistakes beginners make and how to fix them
• How a plan interacts with different account types and costs

Why write it down

A plan that lives only in your head will quietly reshape itself to fit whatever trade you just took. Write it down and it can still be broken, but at least you will know that you broke it. That awareness is the first thing you need before you can improve.

The cost side of a written plan comes from TabTrade’s published Pricing; every rule below assumes you know what a trade costs before you take it.

When the plan stays mental, your brain is the judge and the defence attorney. A losing trade becomes “the setup was almost there” or “I knew it was a gamble.” A written plan removes that wiggle room. You either followed the trigger or you did not. The document is dumb and literal, which is exactly what makes it useful.

Traders who resist writing a plan often say the market is too fluid for rigid rules. That confuses a plan with a script. A plan does not tell you what the market will do. It tells you what you will do in response. It is a decision tree, not a prediction. The market can do anything. Your job is to have a lawful response.

The seven sections

1. Markets and sessions: the precise instruments and the precise hours you intend to trade.
2. Bias: the process for determining higher-timeframe direction before hunting for entries.
3. Setups: each setup gets a name and a written trigger. A trigger such as “Pullback to the 50 EMA in an uptrend, with a bullish engulfing close on H1” can be tested. “Buy the dip” cannot.
4. Entry: whether the order is market or limit, and exactly where it goes.
5. Exit: the rule for stop placement, the rule for targets, and any logic for partial exits or trailing.
6. Risk: percentage risked per trade, maximum simultaneous positions, and daily and weekly loss limits.
7. Review: the review schedule and the conditions that justify changing the plan.

Markets and sessions: be narrow before you go wide

A trader who writes “I trade forex” in their plan has written nothing. Which pairs? How many? A plan that lists 25 instruments for a single trader is not a plan. It is a wishlist. Start with a maximum of five instruments. Three is better. You need to see the same chart thousands of times before patterns become intuitive.

Session matters just as much. A setup on EURUSD at 10:00 London time behaves differently from the same setup at 22:00. Specify a start and end time in your local timezone. If you trade US shares, state the session explicitly. Share hours and server hours may shift with daylight saving. Check the current symbol specification and server clock, then write that window in the plan.

A good Markets and Sessions entry looks like this:

• EURUSD, GBPUSD, USDJPY
• 07:00 - 11:00 GMT only
• No new positions after 10:30 GMT
• No positions held over weekends

A bad one looks like this:

• Forex majors
• Whenever I have time

Bias: the higher-timeframe anchor

Your bias section answers one question: which direction am I allowed to trade this week or this session? It does not give you a setup. It gives you a filter. If the bias is long on EURUSD, short setups fall outside the plan. Filtering by direction is the simplest way to reduce the number of trades taken.

Bias can come from a weekly trendline, a 200-period simple moving average on the daily chart, a momentum oscillator above or below a threshold, or even a simple rule like “only trade in the direction of the prior week’s close relative to the week open.” Be specific about the chart and the indicator. “Price above the 50 SMA on D1” is testable. “General uptrend” is not.

Setups: name them and lock them

Every setup in your plan needs a name. That sounds trivial. It is not. A name forces you to define boundaries. When you name something “Pullback to Demand,” you can later ask: “Was that really a pullback to demand, or did I just talk myself into it?”

For each named setup, write:

• The chart timeframe you watch for it.
• The conditions that must be true before you even look for a trigger.
• The exact trigger event.

Example:

Setup name: Trend Continuation at 50 EMA

Conditions:

• H4 trend: price above 200 SMA and 50 SMA above 200 SMA.
• H1 pullback: price touches or comes within 5 pips of the 50 EMA.
• No major news release in the next two hours (check economic calendar).

Trigger:

• Bullish engulfing candle closes on H1 at the EMA touch zone.
• Engulfing body must be larger than the prior three candle bodies.

If you cannot write it this tightly, you do not have a setup yet. You have a hunch.

Entry: market or limit, and exactly where

Once the trigger fires, you need an entry instruction a stranger could execute. “Enter on the pullback” does not qualify. Write: “Market order at the close of the trigger candle.” Or: “Limit order at the 38.2% Fibonacci retracement of the prior swing, with a 10-pip tolerance.”

If you use limit orders, specify how long the order stays live. “Limit order at 1.2650, valid for four hours, cancelled if not filled.” If the market trades through your limit without filling you, define whether you chase or stand aside. Chasing without a rule is how small losses become large ones.

Where costs fit into the entry decision

Your entry rule should acknowledge the account type you trade on because costs affect where a trade makes sense. On a Standard account you pay via the spread. On an Edge account you pay a raw spread plus a fixed commission. The difference matters for tight stops.

The plan’s cost line starts from average spreads on the Edge account.

On TabTrade’s Edge account on MetaTrader 5, FX and metals incur a commission of $3.50 USD per lot per side. A round turn is $7 USD per lot. If your typical stop is 10 pips on EURUSD, you need to know what that commission does to your net risk. We will work through the arithmetic in the Risk section.

Exit: the part most traders leave vague

Exits break down into three sub-sections:

1. Initial stop loss. Where does the trade become invalid? Not where it hurts. Where it is wrong. Write a price, not a pip distance. “Stop at 1.2520, below the prior swing low” is a price. “Stop at 25 pips” is lazy. One adapts to market structure. The other is arbitrary.
2. Target or targets. One target, two targets, or a trailing method. If you use multiple targets, state what percentage of the position you close at each. “Close 50% at 2R, move stop to breakeven, let the rest run to 4R or the 200 SMA on H4.”
3. Trade management. Do you move the stop to breakeven? When? “When price reaches 1R in profit, stop moves to entry” is a rule. “When it feels right” is not.

Exits before entries

Draft section 5 before section 4. When exits are defined first, traders usually produce better entries. A poor entry tends to make a sensible stop impossible, and that conflict becomes obvious during planning rather than during a losing trade.

Here is a concrete example of how that conflict shows up. All prices in the worked example are illustrative.

Suppose you have a bullish setup on GBPUSD. You identify the nearest swing low as the obvious stop, at 1.2610. Your planned entry is a market order at the close of a bullish engulfing candle on H1. The candle closes at 1.2680. That is a 70-pip stop.

Now you run the position size calculation. You risk 1% of a $5,000 account: $50. Seventy pips at $50 risk produces 0.071 lots. Round down to the 0.01-lot volume step and trade 0.07 lots. Actual price risk is 70 pips × $0.70 per pip = $49 before costs.

Now imagine a better-priced entry at 1.2650 instead. The stop is still at 1.2610, so the tighter 40-pip stop is more sensitive to normal price movement. The same $50 risk target produces 0.125 lots. Round down to 0.12 lots, giving actual price risk of 40 pips × $1.20 per pip = $48 before costs. Both examples target the same dollar risk; the lower entry permits more notional size because its stop is closer.

When the plan forces you to define the exit first, you are forced to see the trade from the stop outward. Your entry becomes the point where the distance to invalidation is acceptable. Many bad entries become obviously bad the moment you measure them against a sensible stop.

Risk: beyond the 1% rule

“Risk 1% per trade” is a starting point, not a plan. A risk section that only says “1% per trade” is incomplete. You also need:

• Maximum simultaneous positions. If you trade three pairs and each carries 1% risk, you are risking 3% if they all move against you at once. Correlated pairs like EURUSD and GBPUSD make that scenario more likely. Decide whether your 1% is per trade or total portfolio heat. Most experienced traders cap total heat at 2 - 3%.
• Daily loss limit. A hard stop on the day. “If I lose 3% of the account in a single day, I stop trading and do not return until the next session.” This is not about protecting capital from the market. It is about protecting capital from you in a tilted state.
• Weekly loss limit. Usually 5 - 6%. Under the plan’s own terms, breaching it ends the trading week. A week off is cheaper than a blown account.

Position size arithmetic: step by step

The formula is simple, but you need to run it with your own numbers until it becomes automatic. Here it is with a worked example.

Account balance: $5,000 Risk per trade: 1% = $50 Stop distance: 25 pips

On a Standard account, your cost is the spread. On an Edge account, you add commission. Let us use the Edge account numbers.

Step 1: Commission cost per lot

Edge account on MetaTrader 5 for FX: $3.50 per side, so $7.00 round turn per lot.

Step 2: Translate the stop distance into a dollar value per lot

For a pair where the quote currency is USD, like EURUSD or GBPUSD:

1 pip on 1 standard lot (100,000 units) = $10 1 pip on 1 mini lot (10,000 units) = $1 1 pip on 1 micro lot (1,000 units) = $0.10

So a 25-pip stop on 1 mini lot loses $25. Add $0.70 round-turn commission, since one mini lot is 0.10 standard lots, and the total loss if stopped is $25.70 per mini lot.

Step 3: Divide your dollar risk by the per-lot risk

You can lose $50. Each mini lot risks $25.70.

$50 ÷ $25.70 = 1.945 mini lots

Round down to 1.9 mini lots, or 0.19 standard lots. That is your position size.

Step 4: Check the minimum volume

Minimum volume on most FX brokers is 0.01 lots. At 0.19 lots, you are fine. If the calculation had produced 0.005 lots, the trade would be untradeable. That is a signal that your stop is too tight or your account is too small for the setup.

Cost comparison across account types

Here is what the numbers look like for the same $5,000 account and the same 25-pip stop on EURUSD, comparing Standard and Edge accounts. This is illustrative arithmetic, not a statement of which account is better.

Cost element	Standard account	Edge account
Spread per lot (typical)	1.0 pip = $10	0.03 pips = $0.30
Commission per lot (round turn)	$0 (spread only)	$7.00
Total cost per lot	$10.00	$7.30
Stop-loss amount per lot (25 pips)	$250	$250
Total loss if stopped	$260.00	$257.30

The Edge account saves roughly $2.70 per standard lot on this setup, assuming the published average spread of 0.03 pips on EURUSD. For a trader risking $50 on the trade, position size is small and the difference is modest. Across ten standard lots, the saving would be about $27 under the same assumptions.

The daily loss limit in practice

A daily loss limit only works if you enforce it mechanically. Do not rely on willpower. On MetaTrader 5 you cannot set a daily loss limit directly, but you can use a simple external check: after each closed trade, update a running P&L in your journal. If the cumulative realised loss hits 3%, close the platform. If you use a VPS or automated trading, script a shutdown condition. The method does not matter as long as the rule is enforced consistently.

From idea to testable sequence: a complete worked example

A plan section reads well in bullet points. It reads better when you see it applied end to end. Here is a full plan for one setup, written the way you would write it before a trading week.

Markets and sessions:

• Pair: EURUSD only.
• New-entry window: 07:00 - 11:00 GMT from Tuesday to Thursday.
• On Monday, the new-entry window is 08:00 - 11:00 GMT.
• On Friday, the new-entry window is 07:00 - 10:00 GMT.
• Positions opened within those windows remain governed by the predefined stop and target rules. Close any position still open before the weekend.

Bias:

• Weekly bias determined on Sunday evening.
• If price closed above the prior week’s high on Friday, bias is long only for the coming week.
• If price closed below the prior week’s low, bias is short only.
• If inside range, no trades until a breakout of the prior week’s range.

Setup name: Trend continuation with an SMA trend filter and 50 EMA pullback

Conditions:

• H4: 50 SMA above 200 SMA.
• H1: price pulls back to within 5 pips of the 50 EMA.
• Economic calendar checked: no high-impact calendar event for EUR or USD in the next two hours. On calendars that use colour markers, this is commonly shown in red.

Trigger:

• Bullish engulfing candle closes on H1.
• The engulfing body is larger than the bodies of the prior three H1 candles.

Entry:

• Market order at the close of the trigger candle.
• No limit orders. Either the order fills at market or I pass.

Exit:

• Stop loss: 2 pips below the low of the trigger candle or 2 pips below the 50 EMA, whichever is lower. Write the exact price.
• Target 1: 2R from entry. Close 50% of position.
• Target 2: prior H4 swing high. Close remaining 50%.
• Stop moves to breakeven when Target 1 is reached.

Risk:

• 1% of account per trade.
• Maximum two simultaneous positions (different setups, not both on EURUSD).
• Daily loss limit: 3% of account. Hit it, close the platform and walk away.
• Weekly loss limit: 5% of account. Hit it, done for the week.

Review:

• Weekly: did I follow the plan? Yes/No per trade. Record.
• Quarterly: review win rate, average R per trade, and whether the setup still appears in the market with the same frequency.

This plan is not complex. But every line is falsifiable. You can look at a chart and say “no, the engulfing body was not larger than the prior three.” That is the point.

Common mistakes beginners make when writing a plan

Mistake 1: Designing a plan for a market that is not currently happening.

A trader studies a trending market, designs a trend-following plan, and then hits a six-week range. The plan looks broken. It is not broken. It is mismatched. A market-state filter covers this: “Only trade when ADX(14) on D1 is above 25.” Below that reading, the plan produces no trades.

Mistake 2: Using too many indicators in the setup conditions.

Three moving averages, RSI, MACD and a Fibonacci retracement all on one chart. The conditions will almost never align. When they do, you will take the trade with excessive confidence because “everything lined up.” That is not edge. That is over-fitting a small sample of past charts. Most written plans use two or three conditions.

Mistake 3: Forgetting that costs degrade small moves.

If your average winner is 15 pips and your total round-turn cost on Standard is 1 pip, costs take 6.7% of your gross profit. On a tight scalping strategy targeting 5 pips, costs take 20%. A plan that works on paper without costs can fail with costs included. Always run the arithmetic.

Mistake 4: Writing a plan so vague that any trade qualifies.

“Buy when the trend is up” is not a plan. It is a vibe. A useful test: hand your plan to another trader. Ask them to find three setups on a random chart. If they come back with three completely different trades, your plan is too loose.

Mistake 5: Revising the plan after a losing streak without enough data.

Three losses in a row is not a crisis. It is Tuesday. The next section covers exactly how to think about this.

Reviewing without over-fitting

Each week, review process: did I actually follow the plan? Each quarter, review performance: does the plan still have an edge?

A sample smaller than 30 - 50 trades carries little information about the strategy rules. Most short-run results are just noise. A plan that gets rewritten after every losing week is no longer a plan; it is a mood.

The weekly review: process, not profit

The weekly review has one question: did I execute? Go through every trade you took. Mark it as “followed plan” or “violation.” Record the violation reason: “entered before trigger,” “moved stop to breakeven too early,” “traded outside session hours.” Do not analyse profit on this review. Profit distracts. A perfectly executed losing trade is a win for the process. A sloppy profitable trade is a red flag.

Keep a simple tally:

Weekly tally:
Trades taken:        7
Plan followed:       5
Violations:          2
  - Revenge trade:   1
  - Late entry:      1

That is your review output. No commentary. No self-flagellation. Just data.

The quarterly review: edge, not emotion

After a quarter, you have enough data to ask harder questions. Pull up your trade log and calculate:

• Win rate: number of winning trades divided by total trades.
• Average R per trade: sum of all R multiples (including negatives) divided by total trades.
• Expectancy: (win rate × average win) plus (loss rate × average loss). Positive is good. Negative means the plan needs work.
• Frequency: trades per week. Too low and the plan may be too restrictive. Too high and you may be overtrading.

An example with small numbers to show the calculation:

Last quarter:
Total trades:        40
Winners:             18 (45%)
Losers:              22 (55%)
Average win:         1.8R
Average loss:        -1.0R

Expectancy = (0.45 × 1.8) + (0.55 × -1.0)
Expectancy = 0.81 + (-0.55)
Expectancy = +0.26R per trade

A positive 0.26R expectancy over 40 trades says the plan has a small edge. It is not a licence to scale up. It is a signal that the logic is sound. With 100 more trades, the number becomes more reliable.

When to change the plan

A plan rule is normally changed only when one of these is true:

• The market structure has demonstrably shifted (e.g. a volatility regime change visible on weekly charts, not just a bad month).
• You have at least 50 trades under the rule and a clear statistical reason to adjust (expectancy negative over that sample).
• A cost or session change makes the setup unviable (spread widening, broker schedule change).

Do not change a plan because you are bored. Do not add a new setup because you saw a YouTube video. The plan is your anchor. Drag it only when the destination has changed, not when the weather gets rough.

Rule of thumb: If you cannot point to a number in your trade log that justifies the change, you are not improving the plan. You are reacting to a feeling. Feelings are not a trading edge.