HOW TO DEVELOP YOUR
TRADING PLAN
FXB’s
TRADING PLAN
A trading plan is a set of guidelines that define your trading.
The benefits of a trading plan:
Removes subjectivity in your trading
Reduce“ roller coaster” experiences
Keeps you focus on your trading goals
Allows you to identify “problems” to work on
Prepares you for the “worst” possible scenario
Prepare Trading Plan based on below QUZ
BY ANSWERING THESE 7 QUESTIONS….
 What is your time frame?
You must define the time frames you’re trading. If you’re as wing trader, then you’ll probably be
Trading the 4hour or daily timeframes.
 What markets are you trading?
You need to state which markets you’ll be trading. It could be equities, forex, futures etc.
 How much are you risking on each trade?
This boils down to risk management. You must know how much you’re prepared to lose on a Single
trade. For starters, I would suggest no more than 1%. This means if you have a $10,000 account,
you can not lose more than $100 on each trade.
Cont…
What are the conditions of your trading setup?
You need to know the requirements of your trading setup. Whether you’ll trade with
the trend, Within a range, or both (For starters I would suggest trading with the trend).
How will you enter your trade?
You could enter on a pull back or break out. Will it be a limit, stop or market order?
Where is your stop loss?
No professional trader would enter a trade without a stop loss. The first thing you
need to ask yourself is, “where will I get out if I’m wrong?”
Cont..
Where is your profit target?
And if the price moves in your favor, you need to know where to take your
profits.
Sample trading plan
Let’s begin…
 If I am trading, then I will only trade EURUSD and AUDUSD. (The markets you
are trading)
 If I’m trading currencies, then I’ll focus on the daily charts (Time frame traded)
 If I place a trade, then I will not lose more than 1% of my account.(Your risk
management)
 If the price is above 200 EMA on daily, then the trend is bullish. (Conditions
before entering a trade and time frame you are trading)
Cont…
 If the trend is bullish, then identify an area of support where price could
retrace to. (Conditions before entering a trade)
 If price retrace to your area of support, then wait for a higher close.
(Conditions before entering a trade)
 If price closes higher, then enter long at next candle open. (Entry)
Cont..
 If you’re long, then place your stop loss below the low of the candle, and take profit
at swing high. ( Exit when you’re wrong, and when you’re right)
 Developing your trading plan should take you not more than 2days.
Execute your trading plan to be a consistent trader
 Once you’ve completed your trading plan, it’s time to take it to the markets.
I would suggest starting really small on a live account because you’re going to suck,
really bad.
Cont…
 You must execute your trades consistently according to your trading plan.
Because if you’re entering trades based on how you feel, instead of following
your plan, then it would be impossible to tell whether your trading has an
“edge” in the markets.
Here are the metrics you should record:
Date – Date you entered your trade
Timeframe – Timeframe you entered on
Setup – Trading setup that triggers your entry
Market – Markets you’re trading
Lot size – Size of your position
Long/Short – Direction of your trade
Tick value – Value per tick
Cont…
Price in – Price you entered
Price out – Price you exited
Stop loss – Price where you’ll exit when you’re wrong
Profit & Losing – Profit or loss from this trade
Initial risking$ – Nominal amount you’re risking
R –Your initial risk on the trade, in terms of R. If you made two times your
risk, you made 2R.
Here’re a few things you can look at to fix your
trading strategy
• Trade with the trend
By trading with the trend, you’ll trade along the path of least resistance which
will improve your performance.
• Set a proper stop loss
You want to set your stop loss based on the structure of the markets and not
the dollar amount you’re willing to risk.
Cont..
• Remove large losses
You can do this by risking no more than 1% on each trade.
CONCLUSION
Now it’s time to put these techniques into practice.
THANK YOU