Trading Plan Template: The 12 Sections Every Prop Trader Needs

The Van Tharp Institute's long-running survey of profitable traders consistently finds that written, documented trading plans correlate with profitability more strongly than any single technical approach. This is not because the plan produces the edge – it is because the plan enforces the consistency that turns a small edge into compounded returns.

Without a plan, every trade is a one-off negotiation with yourself: should I take this? Is the size right? What's my stop? That friction produces three failure modes: (1) missed setups you would have taken with rules, (2) impulse trades that violate whatever edge you have, (3) inconsistent sizing that distorts your R-distribution. Evaluators and prop-firm risk managers look for consistency precisely because it is what separates traders who make money from those who happen to win occasionally.

A plan does not have to be long. A two-page document with the 12 sections below is more useful than a 50-page treatise. Detail where it matters (setup entry conditions, exit rules, sizing), brevity where it doesn't (philosophy, aspirations). The rest of this article is a section-by-section template you can use directly.

List the exact instruments you trade and, just as importantly, the ones you do not. Example: "I trade EURUSD, GBPUSD, XAUUSD, ES, NQ. I do NOT trade crypto, exotics (TRY, ZAR, MXN), or any single-stock equities."

Include reasoning – why these instruments, why not others. "I trade EURUSD because tight spreads and deep liquidity make 5-pip stops feasible; I avoid exotic pairs because swap costs and gap risk exceed my edge." This forces you to justify the choice and makes it easier to stick to the list when a tempting chart appears in an instrument outside your universe.

Also list instrument-specific rules: "On XAUUSD I use 2× the pip stop vs EURUSD because ATR is ~2× higher. On NQ I reduce contract count by 30% during CPI week."

Specify exactly when you trade. Example: "Monday–Friday, 07:00–11:00 UTC (London AM and London/NY overlap) for FX. I do not trade Asian session. I do not trade Friday afternoon US session."

Why restrict hours? Two reasons: (1) you have an edge in specific sessions and noise outside of them, (2) hour discipline protects against boredom-driven trades in lower-liquidity windows. Most prop traders who blow accounts do so during hours they had no business trading – 23:00 UTC on EURUSD is a classic trap.

Include blackout rules: "I do not trade in the 30 minutes before or after NFP, CPI, or FOMC unless my specific news-fade setup triggers." Align with firm rules on news trading if you are on a funded account.

This is the heart of the plan and the section most traders skip or handwave. For each setup, document:

• Name: short identifier, e.g., "London Asian-Range Breakout".
• Pre-conditions: what must be true in the market before the setup is valid (e.g., "Daily trend is up", "ADX on H1 > 20", "ATR is within normal range").
• Trigger: the specific event that creates the entry signal (e.g., "H1 candle closes above prior Asian range high with volume > 1.3× average").
• Entry: exact price and mechanics (market order at trigger close, or stop-limit at breakout level, etc.).
• Stop: exact stop-loss rule (e.g., "0.5 × ATR(20) below entry bar low").
• Target: exit rule for profit (e.g., "2R or prior day's high, whichever is closer; trail stop behind H1 swing lows past 1R").
• Invalidation: when a setup that formed gets cancelled (e.g., "If H1 closes back below breakout level before 2 bars pass, setup is void").

A stranger reading this should be able to look at historical charts and mark where your setups would have triggered. If your description is so vague that two readers would mark different trades, rewrite it.

Specify risk in R (fixed fraction of account), not in absolute dollars:

• Per-trade risk: "0.5% of account per trade during evaluation; 1.0% on funded account."
• Per-day risk: "Stop trading after 3R loss in a single day OR 2% drawdown, whichever comes first."
• Per-week risk: "Stop trading for the week after 5% drawdown from start-of-week equity."
• Correlation cap: "Maximum 2R aggregate exposure in correlated positions (e.g., long XAUUSD + short USDJPY counts as one position)."
• Position size formula: "Position = (Account × Risk%) ÷ (Stop × Pip value)."

Also document: how you handle winners (fixed 2R target, trail, scale out), how you handle drawdowns (reduce size after 3 consecutive losses, return to normal after 2 consecutive winners), and how you scale size when the account grows (fixed fractional vs fixed ratio).

See risk management and position sizing calculators for the mathematics behind these numbers.

Every closed trade gets logged. At minimum: instrument, direction, entry time, exit time, entry price, stop, target, exit price, position size, R-multiple, setup name, screenshot of chart. Most trading journals (Edgewonk, TradesViz, Trademetria, or a custom Notion/Airtable) support most of these fields out of the box.

Document what you journal beyond the mechanics: emotional state at entry, deviation from plan, quality of setup (A/B/C grade), and a single sentence about why you took it. These qualitative fields are what separate a journal from a trade log and make review meaningful.

See our journal template for the full field list and structured grading rubric.

Three levels of review, each on a set schedule:

Daily review (10–15 minutes after close): Log each trade in the journal. Screenshot each chart. Note deviations from plan. One-sentence summary: "What was the best trade and why, what was the worst and why."

Weekly review (30–60 minutes Sunday): Calculate weekly expectancy, win rate, average R. Review each A-grade and C-grade setup on the charts. Identify one process improvement for next week.

Monthly or quarterly review (2–4 hours): Analyze 30/90-day performance by setup, instrument, session. Update the plan document with changes. Back-test any rule changes on historical data before deploying.

Skipping review is how small leaks become big ones. The whole plan collapses if you do not measure whether you are following it.

Documented protocols for emotional states you know will impair your trading:

• After 2 losses in a row: take a 15-minute break, walk, drink water. Do not open a new position.
• After 3 losses in a row: stop trading for the day regardless of time remaining in session.
• After a big winner (>3R): reduce size for the next 2 trades – research (Lo, Repin & Steenbarger 2005) shows traders chase after wins, leading to degraded decision quality.
• Sleep-deprived, sick, intoxicated, emotionally upset: do not trade. Period.
• Revenge trading warning signs: double-sizing, trading outside plan hours, taking setups not in your list – all are signals to stop and walk away.

See trading psychology for evaluations for the research behind these rules.

Document your trading environment in enough detail that you could reconstruct it from scratch:

• Broker(s) and accounts: prop firm, connection type (MT4/MT5/cTrader/NinjaTrader), maximum leverage, account numbers.
• Platform configuration: workspace layout, indicator settings, watchlist.
• Connectivity backup: secondary internet (mobile hotspot), emergency broker phone number.
• Position-flatten procedure: exact steps to close all positions if your platform freezes.
• Physical setup: monitors, keyboard, chair – consistent environment helps consistent execution.

Include security: 2FA on broker accounts, password manager, no trading on public WiFi. An account hack is a recoverable disaster only if you have taken the precautions.

Distinguish outcome goals from process goals.

Outcome goals (what the account does): "Target +8% per month with max drawdown <6%. Annualized Sharpe > 1.0." These are aspirational; you control them only indirectly – model the reward side against the reward-potential table before you commit to a target.

Process goals (what you do): "Follow the plan on 95% of trades. Journal 100% of trades. Review weekly. Take zero trades outside my instrument and hour list." These are under your direct control and track whether you are executing.

Measure both. A trader who hits +8% monthly but followed the plan 70% of the time got lucky; a trader who follows it 95% of the time but earns 4% monthly is building the foundation that will produce the 8% consistently. Emphasize process goals in your weekly review – outcomes are a lagging indicator of process.

If you are trading on a funded account, document the firm's rules verbatim:

• Profit target for evaluation
• Daily loss limit (fixed or trailing, intraday or end-of-day)
• Maximum drawdown (fixed, trailing, or static)
• Minimum trading days required
• Consistency rule (e.g., max 30–50% of total profit from a single day)
• News-trading restrictions (specific events prohibited)
• Weekend holding (allowed or forbidden)
• Profit-split schedule and payout frequency
• Scaling plan (additional account sizes and conditions)

The rules change frequently – re-verify before each evaluation. See prop firm checklist and passing evaluation for the underlying dynamics.

The plans most likely to be ignored are the emergency ones – document them so they run on auto-pilot when stress hits:

• Platform freeze: call broker phone number, flat all positions manually, do not re-enter until platform is confirmed working.
• Internet outage: switch to backup connection (mobile hotspot). If both fail, call broker to close positions.
• Broker outage: accept the inability to act. Do not attempt to hedge through another account – most prop-firm rules prohibit correlated accounts.
• Health emergency: named trusted contact who knows broker phone and can call to flatten the account on your behalf (with appropriate authorization).
• Hitting daily loss / max DD: close all positions immediately, cancel pending orders, turn off the platform, accept the result. Do NOT attempt to trade back the loss.

The chart below summarises an informal survey of 400 failed prop-firm evaluations collected across Discord communities and trading forums during 2023–2024. The data is self-reported and not peer-reviewed, but the pattern is striking: traders who kept a written plan covering setups + risk + review failed at roughly half the rate of traders who did not.

Interpret cautiously: this is survey data, not a controlled study. The likely causal mechanism is selection – traders who bother to write a plan are also more likely to be disciplined in other ways. The act of writing the plan is probably a marker of the discipline, not a cause of it. But building the plan is also a scaffold that teaches the discipline – so the correlation cuts both ways.

A one-page checklist to run through before each session. Example:

• [ ] News check – any high-impact releases in next 4 hours? If so, which instruments affected, what is my blackout rule?
• [ ] Multi-timeframe bias – Daily trend on my instruments (up/down/sideways). Kijun / MA state.
• [ ] Key levels marked – overnight high/low, prior day's high/low, nearest support/resistance from higher timeframe.
• [ ] Plan alignment – which of my setups can trigger today, which are off the menu?
• [ ] State check – Am I rested? Sober? Unemotional? If no to any, reduce size or skip.
• [ ] Risk budget – how much R do I have available today? (account equity × daily cap − already-used).
• [ ] Platform sanity – charts loading, orders testing correctly, broker connection confirmed?

Five minutes. Every session. This single habit catches more mistakes than any indicator ever will – it forces you to confront whether the plan applies to today's conditions.