What is a trading plan and how to write one

Updated: 7 November 2026

In short: A trading plan is a set of rules written in advance: what you trade, on which timeframe, under what conditions you enter, where the stop and target go, how much you risk and when you stop for the day. It protects you from emotional decisions.

What goes in the plan

Instruments and trading hours. Entry conditions — concrete, for example "CHoCH on H1 and a return into the 0.25–0.75 zone". Where the stop and target go. Risk per trade in percent. Daily and weekly loss limits.

How to use it

Before every trade — check it against the checklist. After — a note in the journal: plan followed or not. After a month you will see how much you lose specifically to breaking the plan.

Example of a one-page plan

Instruments: BTC/USDT, EUR/USD. Timeframes: H4 — direction, H1 — entry. Setup: I trade only with the H4 trend; I wait for a liquidity grab on H1 and a return to a zone of interest; entry in the 0.25–0.75 zone, stop beyond the zone. Risk: 1% per trade, no more than 3% at once. Target: at least 1:2. Limits: at most 3 trades a day, stop after two losses. Journal review — on Sundays.

How to tell the plan works

Make 30–50 trades with it without changing the rules. Calculate the win rate, average win and average loss in R (units of risk), and the maximum drawdown. If the plan is profitable on a virtual account and you followed it in 90% of trades, it can move to a small real account. Do not change the plan after three bad trades: that is not statistics yet.

Mistakes in trading plans

A ten-page plan nobody rereads. Vague rules like "enter on a good signal". No daily limits. No rule for what to do after a loss. In Extremum your trading plan lives in your profile, and exercises and statistics are checked against it — so you can see where you drift from your own rules.