Key takeaways
- A plan is a set of decisions made before the market opens, so that you aren't making them under pressure.
- Fix your risk per trade (0.5–1% is a sensible range), a daily loss limit and a weekly loss limit. These three numbers matter more than your entry rules.
- Trade the hours your pairs actually move. Over the last year GBP/USD's London session averaged 62 pips against 41 in the Asian session.
- If you can't write a setup down precisely enough to test it, it isn't a setup yet.
Most trading plans fail for one of two reasons. They are either too vague to follow (“trade with the trend, manage risk”) or too long to remember. A plan that works fits on one page, and every line on it is a decision you would otherwise make in the moment, when you are most likely to get it wrong.
Here is a structure that works, section by section, with a template at the end.
1. Why you are trading, and what success means
Write one sentence on what you want from trading over the next 12 months, and make it about process rather than money. “Follow my plan on 95% of trades and keep a complete journal” is achievable and measurable. “Make 10% a month” is neither: it pushes you to take more risk exactly when you are losing.
Then set a realistic bar. Most retail CFD accounts lose money; regulators have put the figure at between 74% and 89%. Breaking even after costs in your first year is a genuine achievement. Why most forex traders lose money sets out the maths.
2. Markets: pick two or three pairs, not twenty
Every pair has its own rhythm: how far it moves in a day, when it moves and what moves it. You learn that only by watching the same charts every day. Choose two or three pairs and ignore the rest.
For most people the majors are the right start: tight spreads, deep liquidity and plenty of coverage. When you choose, look at:
- Average daily range. It sets your stop and target sizes. EUR/USD has averaged about 56 pips a day over the last 90 days, GBP/USD about 70 and GBP/JPY about 141. A 20-pip stop means something very different on each. Every market page shows current figures.
- Correlation. EUR/USD and GBP/USD have moved together with a correlation of about +0.84 over the last year. Trading both at once is often one bet twice.
- Cost. Spreads on exotics can be ten times those on EUR/USD. Costs compound with every trade.
3. Hours: trade when your pairs move
The second decision is when. Volatility isn’t spread evenly across the day, and quiet hours produce small moves that barely cover the spread.
Over the 12 months to 16 October 2026, measured in each centre’s own local hours:
| Session (local time) | EUR/USD avg range | GBP/USD avg range |
|---|---|---|
| Asian (Tokyo 09:00–18:00) | 32 pips | 41 pips |
| London (08:00–17:00) | 47 pips | 62 pips |
| New York (08:00–17:00) | 44 pips | 58 pips |
If you can only trade in the evening in Europe, that is fine, but write it down and choose pairs that move then. Our market hours tool converts every session into your time zone.
4. Setups: precise enough to test
A setup is a set of conditions you could hand to someone else and get the same trades. “Price looks strong” isn’t one. “The 1-hour candle closes above the Asian-session high between 08:00 and 11:00 London time, with the daily trend up” is.
For each setup, write down:
- the conditions that must all be true;
- where the entry goes;
- where the stop goes, and why there (the level that proves the idea wrong);
- where the target goes, or how you exit.
Start with one setup. Before you trade it with real money, test it on past data. See how to backtest a forex strategy properly for the traps, and our London breakout test for a worked example.
5. Risk: the three numbers that keep you in the game
This is the part of the plan that matters most, and it fits in three lines:
- Risk per trade. A fixed percentage of the account, risked between entry and stop. 0.5–1% is a sensible range. At 1%, ten losses in a row, which will happen, cost about 10%.
- Daily loss limit. For example 2%. Hit it and you stop for the day, no exceptions.
- Weekly loss limit. For example 4%. Hit it and you stop until Monday, then review before you trade again.
Your position size then follows from the stop, never the other way round. With a $5,000 account, 1% risk is $50. With a 25-pip stop on EUR/USD, where a pip on one standard lot is worth $10, the position is $50 ÷ (25 × $10) = 0.20 lots. The position size calculator does this for any pair and account currency.
6. Rules for the moments you won’t think clearly
Write down what you will do in the situations that cause most damage:
- After a loss: no new trade for 30 minutes. Revenge trades are the most expensive trades most people make.
- Around high-impact news (central bank decisions, CPI, US jobs data): no new positions in the 15 minutes before, and decide in advance whether you hold open trades through it.
- Moving a stop: only ever towards profit, never further away.
- On Fridays: whether you hold positions over the weekend, when prices can gap.
7. Records: the journal
Log every trade: date, pair, setup, entry, stop, target, size, result in pips and in R (multiples of the amount risked), and one line on whether you followed the plan. Screenshot the chart.
Results in R matter more than results in money: they show whether the method works regardless of how big your account was at the time.
8. Review: weekly, monthly, quarterly
- Weekly (30 minutes): did you follow the plan on every trade? Which rule did you break?
- Monthly: results by setup, by pair and by hour. Cut what isn’t working.
- Quarterly: is the setup still behaving as it did in testing? Markets change; a plan should be updated on evidence, not after one bad week.
The one-page template
Copy this and fill it in before your next session:
| Section | Your plan |
|---|---|
| Goal for the next 12 months | Follow the plan on 95% of trades; keep a full journal |
| Pairs | EUR/USD, GBP/USD |
| Hours | 08:00–12:00 London time, Monday to Friday |
| Setup 1 | (conditions, entry, stop, target) |
| Risk per trade | 1% of account |
| Daily / weekly loss limit | 2% / 4% |
| News rule | No new trades 15 minutes before high-impact releases |
| Journal | Every trade, with screenshot and R result |
| Review | Sunday evening, 30 minutes |
The plan’s real job is to make the next decision boring. When a trade goes against you, you shouldn’t be deciding what to do; you should be reading what you already decided.
This article is for education and information, not investment advice. Trading forex and CFDs on margin is high risk and most retail accounts lose money. Read our risk warning.