How to Build a Winning Trading Plan


The success of every trader is can be seen from their trading plan. In creating a winning trading plan, a trader shouldn’t only write about “how” but it should be “why” the trading plan can be useful. Learn here how to make the winning trading plan and how you can follow it.

Start Your Strategy with Initial Questions

  • The first question is what kind of the “edge” you want to use to make money? After you decide the edge, you need to think whether you believe the market direction can be predicted or not. If yes, how’s the next? Trend following, reversion, fundamental and sentiment analysis, or pure numbers, which one will you use.
  • Next is how much the money you wanted and dare to risk in the trading plan.
  • Decide which one the best broker, country, and trading style towards your account size.
  • In trading plan, risk management strategy is important. How and what will you do with it?
  • Last, the ability to handling the worst case is needed. You need to a test to calculate best, average, worst scenarios regarding your trading account.

Size Your Risk

  • Decide the currency for your trading and how many trades will be opened at any one maximum time.
  • Next is very important to decide how much discretion to be allowed in choosing currency pairs, exiting and opening trades. Then, how much will be based on the fast and hard rules.
  • If you will manage the open trades, how you are going to do?
  • You need to decide your devoted time for your trading plan become a day trader, position trader, swing trader, or the combination of these trader.

You need to think and answer these questions carefully. Start to write your winning trading plan with comprehensive and well-reasoned answer for every question.

Start to Write Your Trading Plan

A good winning trading plan should be written and contained with:

  1. Deciding the trading pairs
  2. The risked maximum position in an open at any time
  3. Decide the applying loss limits in the daily, weekly or monthly period of time
  4. Strategy of trade entry include stop loss and position size
  5. Decide you will or won’t actively manage the open trades
  6. Strategy of trade exit
  7. Plan the discretion position, what kind of prices towards the next action. For example, if in an hour the price trades is above 1.1000, you can exit from the half size, but if doesn’t you can stay in the normal trade.
  8. It’s important to decide the intensity of trading and trading plan review.

Reviewing Your Trading Plan

The last step is to review your trading plan by following:

  • First, you need to take note about constant following the plan and the covered things with the winning trading plan in the end of every trading session. You can meet the moments where you feel confused about what to do, where the theory looks working but actually in the real action it’s difficult to be applied. You need to change the trading plan. You need also think for the easier way where you can manage the losses.
  • Next, watch your losses and especially profits, whether it’s better or worse than the suggested back testing. Think the reason and try to fix them. The best winning trading plan is the one that wins over the long term.