Trading Plan Definition – What is Trading Plan? | CFI

trading plan

The first thing to be clear on when deciding when to enter a trade is your trading plan. only enter trades that align with your trading plan, because they will give you higher profit potential and you will be able to manage your risk better. knowing what kind of trader, you are, and what your plan is, will help you choose the trades that align with your personality portfolio.

 

Are you an investor, day trader, swing trader or a trend-following trader? if you are a trend-following trader, is there an established trend in the market? is the market going up or down? if you are bearish, then avoid trading when the market doesn’t reflect a bearish pattern – wait for possible reversal points before you enter a position.

 

A trade trigger helps you decide when to enter a trade. after you have established that the market has the right conditions for your trading plan, you need to have a specific trigger that tells you "now is the time to enter or exit the trade". whether the market is in an uptrend or downtrend, there are specific features in each trend that provide better opportunities to trade than others.

 

For example, after the price has widened, you may wait for a pullback, or for new highs to form. if you are bearish and you think that the trend will reverse, wait for a bearish engulfing pattern. you should always look for precise events that help you distinguish trading opportunities from the overall price movements.

 

How much are you likely to make from the trade you intend to place? is it worth your time and effort? don't just choose your profit target randomly but base it on something measurable. look through the charts to see the targets that are being projected based on the pattern. trends will also show you the possible reversal points based on past price action to help you determine the profit potential of the trade.

 

For example, if you buy near the bottom of the chart, you can set your price target closer to the top of the chart. having a price target helps you identify the right moment to exit a trade so that you do not hold it for too long and start incurring losses.

 

key takeaways

  • No matter what your level of trading is or your experience in the finical markets, a trading plan will always help you enhance your trading activities.
  • Knowing what kind of trader, you are will help you develop a trading plan that aligns with your trading personality.
  • Define your tradable trend to avoid placing a trade when market conditions do not reflect your trading plan.
Credit Financier Invest (Mauritius) Ltd is an award winning global financial markets provider with over 23 years of experience and regulated entities in several jurisdictions, focused on offering impeccable execution and trading conditions including very low spreads, professional services, dedicated support and powerful tools.
Credit Financier Invest (Mauritius) Ltd has regulated subsidiaries in
London • Larnaca • Beirut • Amman • Dubai • Port Louis
Credit Financier Invest

Important Disclaimer:


We would like to remind that while we endeavour to provide best possible services, CFI provides execution only services and any information, reports, opinions, commentary or other materials he receives from CFI directly or from its employees or through any analytical tools provided to him or third party research provided to him from the Company shall not be deemed as investment advice and it cannot be relied upon to make investment decisions. The Client commits to make his own research and from external sources as well to make any investment. The Client accepts that CFI will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The contents of any report provided should not be construed as an express or implied promise, as a guarantee or implication that clients will profit from the strategies herein, or as a guarantee that losses in connection therewith can, or will be limited.


Forex and CFDs are leveraged products that incur a high level of risk and a small adverse market movement may expose the client to lose the entire invested capital. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The possibility exists that you could sustain a loss in excess of your deposited funds even if a stop loss is used and therefore, you should not speculate with capital that you cannot afford to lose and be aware of trading risks. Credit Financier Invest (Mauritius) Ltd provides general information that does not take into account your objectives, financial situation or needs. The content of this website must not be interpreted as personal advice. Please ensure that you understand the risks involved and seek independent advice if necessary.

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