1. A trading plan is a comprehensive decision-
making tool for your trading activity. It helps
you decide what, when and how much to
trade. A trading plan should be your own,
personal plan – you could use someone else’s
plan as an outline but remember that
someone else’s attitude towards risk and
available capital could be vastly different to
yours.
2. Your motivation for trading
• The time commitment you want to make
• Your trading goals
• Your attitude to risk
• Your available capital for trading
• Personal risk management rules
• The markets you want to trade
• Your strategies
• Steps for record keeping
3. 1. You need a trading plan because it can help you make
logical trading decisions and define the parameters of your
ideal trade. A good trading plan will help you to avoid
making emotional decisions in the heat of the moment.
The benefits of a trading plan include:
2. • Easier trading: all the planning has been done upfront,
so you can trade according to your pre-set parameters
3. • More objective decisions: you already know when you
should take profit and cut losses, which means you can
take emotions out of your decision-making process
4. • Better trading discipline: by sticking to your plan with
discipline, you could discover why certain trades work and
others don’t
5. • More room for improvement: defining your record-
keeping procedure enables you to learn from past trading
mistakes and improve your judgment
4. There are seven easy steps to follow when
creating a successful trading plan:
1. Outline your motivation
2. Decide how much time you can commit to
trading
3. Define your goals
4. Choose a risk-reward ratio
5. Decide how much capital you have for
trading
6. Assess your market knowledge
7. Start a trading diary