A trading plan is a written operating document that defines what can be traded, when a setup is valid, how risk is sized, how orders are managed and how evidence will be reviewed. Fill it before trading; do not use it to justify decisions after the result.
1. Purpose and scope
| Plan owner | [Name or role] |
|---|---|
| Markets permitted | [Exact instruments] |
| Decision timeframes | [Context, setup and entry timeframes] |
| Trading windows | [Sessions, days and excluded periods] |
| Plan version and date | [Version / effective date] |
2. Setup definition
- Context required: [Observable market condition]
- Setup trigger: [Specific event or structure]
- Entry rule: [Order type and confirmation]
- Invalidation: [Observation showing the thesis failed]
- No-trade conditions: [Liquidity, event, spread or structure exclusions]
3. Risk rules
| Maximum planned loss per trade | [Amount or percentage with approved basis] |
|---|---|
| Position-size method | [Formula and rounding] |
| Aggregate open risk | [Limit and calculation] |
| Correlation treatment | [How overlapping exposures are grouped] |
| Daily or period stop condition | [Rule, reset and escalation] |
Use the position-size calculator only after the invalidation and risk policy are defined.
4. Exit and management rules
- Initial protective exit: [placement and order type]
- Profit-taking: [target, trailing or conditional exit]
- Time-based exit: [if applicable]
- Stop movement: [permitted conditions]
- Partial exit: [quantity and reason]
- Unexpected event: [reduce, exit or hold rule]
5. Execution protocol
- Check instrument, session, spread, event risk and existing exposure.
- Capture the pre-trade thesis and screenshot.
- Calculate quantity from the approved risk rule.
- Verify order side, type, price, stop and target before submission.
- Record the fill and any slippage.
- Do not modify the trade outside an explicit management rule.
6. Journal and evidence
For every decision, record valid setup, entry, initial stop, position size, planned risk, costs, actual exit, net result, result in R and process deviations. Use the trading journal template to preserve the same fields across the sample.
7. Review schedule and change control
| Review | Purpose | Allowed change |
|---|---|---|
| After each trade | Data completeness and rule compliance | Correct records; do not redesign from one outcome |
| Periodic batch | Performance, errors and market conditions | Form a testable hypothesis |
| Formal plan review | Evaluate a predefined sample and evidence | Approve a new version with effective date |
8. Pause and escalation rules
- Pause when required data or platform function is unreliable.
- Pause when position or loss limits are breached.
- Pause when repeated deviations show the plan is not being followed.
- Investigate unusual slippage, gaps or contract changes.
- Resume only under a written condition and approved plan version.
Plan approval block
Plan version: Effective date: Approved by: Evidence reviewed: Changes from prior version: Next scheduled review: Emergency pause authority:
Limits
A complete document does not prove that the strategy has an edge. The rules still require backtesting, forward testing and strategy validation. Trading Plan explains the wider design principles. Find related resources at MFXG tools.