How to make a trading plan (with a template)

A trading plan is the list of decisions you make with a cool head so you don't have to make them in the heat of the moment. Without a plan every trade is improvisation; with one, you can measure whether you follow it and whether it works.

It doesn't have to be long. It has to be specific: if two people read your entry rule, they should enter at the same place.

1. What you trade and when

• Two or three instruments at most when starting.
• Your hours: for example, the London or New York open, and nothing outside them.
• Which news you avoid (for example, no open positions 5 minutes before a high-impact release).

2. Your setups, with objective rules

For each setup, write down:

• Context: the trend, level or session where it's valid.
• Entry: exactly what has to happen to enter.
• Invalidation: where the stop goes and why there.
• Exit: target, partials or management.

3. Risk and limits

• Risk per trade: a fixed percentage, usually 0.5% to 1%.
• Max daily loss: for example 2R; when you hit it, the day is over.
• Max trades per day and what you do after two losses in a row (stop, cut risk…).

4. Routine and review

• Before: levels, news and the day's plan.
• During: only setups from the plan; the checklist before every entry.
• After: log the trade with its emotion and mistakes.
• Every week: a review with one single thing to improve.

Template to copy

• Markets: ___ · Hours: ___ · News I avoid: ___
• Setup 1: context ___ · entry ___ · stop ___ · exit ___
• Risk per trade: ___ % · Max daily loss: ___ R · Max trades: ___
• After 2 losses in a row: ___
• Routine before / during / after: ___

Make the plan enforce itself

In Katanith each strategy stores its rules and they appear as a checklist when you log the trade. You see how often you follow your plan and how much breaking it costs you, in R and in money.