Building a Trading Plan

A trading plan is your rulebook. Without one, you are gambling. With one, you are running a business. Every professional trader has a plan, and so should you — even as a beginner.

Your trading plan should answer these questions:

What will I trade? Pick one or two currency pairs and learn them deeply. EUR/USD and GBP/USD are good starting points. Do not try to trade everything.

When will I trade? Choose specific hours that fit your schedule and align with high-liquidity sessions. The London session (7 AM to 4 PM GMT) and the London-New York overlap (noon to 4 PM GMT) offer the best conditions for most strategies.

How much will I risk? Set a maximum risk per trade — one to two percent of your account. Never deviate from this, no matter how confident you feel about a trade. A one thousand dollar account risking two percent means twenty dollars maximum per trade.

How will I enter? Define your entry criteria. This could be as simple as "buy when price bounces off a support level during London session" or "sell when price breaks below a consolidation range." The specific method matters less than having a clear, repeatable rule.

How will I exit? Define your stop loss and take profit before entering every trade. The stop loss protects you from large losses. The take profit locks in gains. Never move your stop loss further away from your entry — this is the number one account killer.

How will I track results? Keep a trading journal. For every trade, record: the date, the pair, your entry and exit prices, the reason for the trade, and the outcome. Review your journal weekly. Look for patterns — what is working and what is not.

Your plan will evolve as you gain experience. That is fine. But having a plan — any plan — is infinitely better than trading on impulse. Write it down. Print it out. Put it next to your screen. Follow it.