What should a forex trading plan include?
A useful forex trading plan specifies the market, timeframe, session, setup criteria, invalidation point, risk check and review process. It should be clear enough that you can compare your actual decisions with the rules afterwards.
A useful plan makes a decision reviewable. It describes what you were looking for, what you chose and how you handled the risk.
Write rules that can be checked
“Take a good setup” is difficult to review. A more useful plan specifies the market and timeframe, the conditions you want to see, the point where the idea becomes invalid and the information you will record. Keep the first version short enough to use.
- Market and session: what will you study, and when?
- Setup criteria: which observations must be present?
- Invalidation: what would make the idea wrong?
- Risk: how will the stop and size be checked?
- Review: when will you look at the decision again?
Review the process as well as the result
A profitable outcome does not prove that the rules were followed. A losing outcome does not prove that a decision was careless. Record the plan, the actual action, costs and any differences. Use the notes to identify repeated mistakes and questions that need more practice.
Change one thing at a time
When you revise a plan, record the change and the reason. That creates a history you can inspect. Demo practice and historical examples can help you test whether the rules are clear before exposing capital.
Further reading: CME Group: Trading Strategies in Your Trade Plan.
Frequently asked questions
What should a forex trading plan include?
A useful forex trading plan specifies the market, timeframe, session, setup criteria, invalidation point, risk check and review process. It should be clear enough that you can compare your actual decisions with the rules afterwards.