Trading plan

Every trader needs to have a trading plan. Below is my trading plan. You can use it as a reference to create your own.

The trading plan describes how I will trade Forex in three parts:

  • Mindset
  • Strategy
  • Risk management

Mindset

What is your trading goal?

Be a consistently profitable trader using the strategy detailed below trading my own account and trading a six-figure prop firm account.

How will you achieve this goal?

Every Sunday and workday at the New York close I will check for setups and place orders on my account. This will be at 23h00 CET. I will also document all trades in my trading journal. By 24h00 I must be done and go to bed. During the day I will only check my trades or charts at 7h00, 11h00, 15h00, 19h00 for 5 minutes max, and then again at 23h00 for the daily New York close.

I will also practice the trading strategy on Tradingview by backtesting all pairs from 5 years back or at least 100 trades per pair. This is in order to become more proficient in spotting my setups and to reinforce confidence in the strategy.

What are your biggest weaknesses?

Fiddling with trades and overtrading. In general not being consistent enough. Stopping after a losing streak. Trading recklessly after winning streak.

How will you overcome your weaknesses?

  • I will limit my exposure to the market to the hours between 23h00 and 24h00 CET.
  • I will only trade the daily TF.
  • I will trade low-risk position size (1 – 2 %).
  • I will only take trades that have a minimum of 1:2 RR potential.
  • I will consider every trade as money lost.
  • I will apply set and forget trading, but I will manage trades on the 1hr, 4hr, and daily TF.
  • I will set limit and stop entry orders with a stop loss and take profit order
  • I will remove limit orders that were invalidated.


What is your daily trading routine?

At 23h00 CET I will:

  • Read through my trading plan and trade setup guide first.
  • Then I will look at the charts for setups.
  • I will remove invalidated entry orders.
  • I will tighten stops if possible.
  • I will place new trades
  • I will record all actions in the trading journal and post trades on Tradingview.

Strategy

Which currency pairs will I trade?

EURUSD, GBPUSD, USDJPY, USDCAD, AUDUSD, USDCHF, Gold and Silver

What time frames will I trade?

Daily.
I will look at 4hr TF only to get a better picture of the price action. I will not trade on setups on the 4hr TF that form during the day.

What are my entry requirements?

Reversal after Indecision on S&R zone

A potential setup forms when there is indecision forming on an S&R zone.

This should mean that momentum is slowing down or has slowed down.

I will trade a possible reversal of the S&R zone.

I can enter at a 50% retracement of a rejection candle or at the break of the candle’s recent high (bullish) or low (bearish).

If the indecision candle is a pin bar/rejection candle with a long wick I can also use a 50% retracement entry, if not I will trade the break lower or higher.

  • Long wicked rejection → 50% retracement entry
  • Else break lower or higher.

A reversal can be a counter-trend trade in which case price needs to be far away enough from the 21 SMA. It can also be a trend continuation trade in which case the price should be not too far away from the 21 SMA. If the market is going sideways and the 21 SMA is more or less flat, I will not set up the trade into two parts. Potential take profit must be about 2R before hitting the 21 SMA.

Reversal after engulfing pattern on S&R zone

As per the method described in the Candlestick Trading Bible.

Continuation after Indecision in trend

As per the method described in the Candlestick Trading Bible.


What are my exit requirements? 

Set and forget for target one

Orders will take me out of the trade.

I will place a take-profit order and a stop-loss order that will take me out of the market either with a loss of a profit.

Managed exits

If a set and forget trade has been on for three or more candles and the price reverses past the last formed anchor candle, then I will close the trade for a smaller than planned profit or loss as the trade will have a high probability of going against me.

Stops

I will place stops behind at least two barriers. For example, a support and resistance zone plus a previous high or low that once passed will invalidate the setup.

Take profit

I will place a take profit order right before the next support and resistance zone at a distance that is minimal 2 times the distance of the entry to the stop-loss order.

Example

When will I decide not to enter trades?

  • I will not place any entry orders if they might be triggered at days with big events like US elections or G20, G7 meetings.
  • I will not place any entry orders on pairs that might be affected by news events that are not number-based but people-based, like speeches, notes, etc.

Risk Management

What is your account type and size (and any other relevant info)? 

Zero account, 1:30 leverage, minimum forex trade size 1000 units at XM because they have reasonable spreads, are regulated, and offer negative balance protection in my jurisdiction. Also, they offer the industry standard when it comes to the trading platform: Metatrader.


What is your risk profile?

Low risk


What is your risk per trade as a percentage? 

1 – 2% per trade or I will trade the smallest possible lot size if this means that the risk is still less than or equal to 3%.

What is your maximum drawdown before you stop and reassess?

10%

Will you have more than one trade open at a time?

Yes


If “yes” to the above, what is your maximum risk exposure at any one time?

6%