A trading plan is a strategy developed by an individual trader to systemize asset evaluation, risk management, trading types, and goal setting. Most trading plans will be divided into two sections: long-term trading objectives and the path to achieving them.

Your personal trading plan will be tailored to your risk tolerance, preferred markets, and trading style. Making a trading plan entails considering your short- and long-term objectives, as well as your expertise and other factors.

A trading plan is a structured set of rules that guides a trader’s decisions in the financial markets. It outlines strategies for entering and exiting trades, risk management techniques, and goals to maintain discipline. A well-defined plan includes:

1. Trading Goals – Clear objectives (e.g., profit targets, risk tolerance).

2. Strategy – Criteria for identifying trades (technical/fundamental analysis).

3. Risk Management – Position sizing, stop-loss levels, and maximum risk per trade.

4. Market Conditions – Preferred assets, timeframes, and trading hours.

5. Review Process – Regular evaluation to improve performance.

A trading plan minimises emotional decisions, enhances consistency, and increases long-term success. Without one, traders often face losses due to impulsive actions. Sticking to a tested plan is key to profitability in volatile markets.