Trading mindset · Lesson 2 of 4
Building a trading plan and routine
4 min read
Draft lesson — under editorial review
A trading plan is a set of decisions you make while calm, so that you do not have to make them under pressure. A routine is the habit that puts the plan into practice every day. Together they turn good intentions into consistent behaviour.
Why write it down?
When a trade is moving against you, your thinking is at its least reliable. A written plan means the important questions have already been answered: what you trade, when, how much you risk and when you stop. If something is not in the plan, the default answer is "not today".
A plan also makes your results measurable. If you follow the same rules for 50 trades, your journal can tell you whether the rules work. If every trade is improvised, there is nothing to measure.
What a plan should cover
Keep it short enough to fit on one or two pages. A practical structure:
1. Markets and timeframes
Which instruments you trade, for example EUR/USD, GBP/USD and USD/JPY, and which chart timeframes you use for analysis and entries. Fewer markets usually mean better focus.
2. Trading hours
When you will look for trades, and when you will not. For example, "London session only, no new trades in the 30 minutes before major scheduled data releases".
3. Setups
A clear description of each setup you trade: the conditions that must be present, where the entry goes, where the stop goes and how the target is chosen. If you cannot describe a setup in a few sentences, it is not yet a rule.
4. Risk rules
- Risk per trade, for example 1% of the account.
- Maximum number of open trades at once.
- Daily and weekly loss limits, for example stop after a 2% daily loss or a 5% weekly loss.
- What happens after a drawdown, for example halve risk after a 10% fall from the account's peak.
5. Trade management
Whether you move stops to break-even, take partial profits or use a trailing stop, and under what conditions. Decide this in advance rather than improvising mid-trade.
6. Review schedule
When you will review your journal and whether any rule can be changed. A common approach is a short weekly review and a deeper monthly one, with rule changes only made at the monthly review.
A sample daily routine
Times below are examples using UK time; adjust them to your own session and time zone.
| Time | Activity | Purpose |
|---|---|---|
| 07:15 | Check the economic calendar | Note high-impact releases and avoid trading into them |
| 07:30 | Mark key levels on your chosen pairs | Prepare scenarios before the session opens |
| 07:45 | Write a short pre-session note | State your mood, any distractions and today's limits |
| 08:00 to 11:00 | Trade only the setups in your plan | Follow the checklist for every entry |
| 11:00 | Stop taking new trades | Avoid boredom trades in quieter hours |
| End of day | Update your journal | Record every trade and how you followed the plan |
The exact schedule matters less than its consistency. A routine reduces the number of decisions you make while tired, distracted or emotional.
An entry checklist
Before each trade, run through a short checklist. For example:
- Does this match a setup in my plan?
- Is there high-impact news due in the next 30 minutes?
- Where exactly is my stop, and why?
- Is my position size calculated for 1% risk?
- Have I hit my daily loss limit?
If any answer is wrong, you do not take the trade. A checklist can feel tedious, but tedium is the point: it slows you down at exactly the moment impulsive decisions happen.
Worked example: the plan in action
Your plan says: risk 1% per trade, maximum two open trades, stop for the day after a 2% loss. Your account is 8,000 USD.
- Risk per trade = 8,000 × 1% = 80 USD.
- Daily limit = 8,000 × 2% = 160 USD.
You lose your first trade (minus 80 USD) and your second (minus 80 USD). Your daily loss is 160 USD, so the plan says you are done for the day, regardless of how good the next chart looks. No debate is required, because the decision was made in advance.
When to change the plan
Change rules at your scheduled review, based on journal evidence from a reasonable number of trades, and change one thing at a time so you can see its effect. Changing rules after every loss means you never find out whether any of them work.
Key takeaways
- A trading plan records decisions made while calm, so you are not deciding under pressure.
- Cover markets, hours, setups, risk rules, trade management and a review schedule.
- A consistent daily routine and an entry checklist reduce impulsive decisions.
- Turn percentage rules into currency amounts at the start of each day so limits are easy to follow.
- Change the plan only at scheduled reviews, one rule at a time, based on journal evidence.
Educational content only — not financial advice. Trading leveraged products such as forex and CFDs carries a high risk of losing money.