business plan sample for trading

Trading Business Plan Template

Written by Dave Lavinsky

Trading Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their trading companies.

If you’re unfamiliar with creating a trading business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a trading business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Trading Business Plan?

A business plan provides a snapshot of your trading company as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Trading Company

If you’re looking to start a trading company or grow your existing company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your trading business to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Trading Companies

With regards to funding, the main sources of funding for a trading company are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for trading companies.

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How to write a business plan for a trading company.

If you want to start a trading business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your trading business plan.

Executive Summary

Your executive summary provides an introduction to your trading business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of trading company you are running and the status. For example, are you a startup, do you have a trading business that you would like to grow, or are you operating a chain of trading companies?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the trading industry.
• Discuss the type of trading business you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail what type of trading business you are operating.

For example, you might specialize in one of the following types of trading businesses:

• Retail trading business: This type of business sells merchandise directly to consumers.
• Wholesale trading business: This type of business sells merchandise to other businesses.
• General merchandise trading business: This type of business sells a wide variety of products.
• Specialized trading business: This type of business sells one specific type of product.

In addition to explaining the type of trading business you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of customers served, the number of products sold, and reaching $X amount in revenue, etc.
• Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the trading industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the trading industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section:

• How big is the trading industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your trading business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, schools, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of trading business you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other trading businesses.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes other types of retailers or wholesalers, re-sellers, and dropshippers. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of trading business are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you make it easier for customers to acquire your product or service?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a trading company, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of trading company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you sell jewelry, clothing, or household goods?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your trading company. Document where your company is situated and mention how the site will impact your success. For example, is your trading business located in a busy retail district, a business district, a standalone facility, or purely online? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your trading marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your trading business, including answering calls, scheduling shipments, ordering inventory, and collecting payments, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to acquire your Xth customer, or when you hope to reach $X in revenue. It could also be when you expect to expand your trading business to a new city.  

Management Team

To demonstrate your trading business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing trading businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a trading business.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.  

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you charge per item or per pound and will you offer discounts for bulk orders? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.  

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your trading business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.  

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and traders don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a trading business:

• Cost of equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your facility location lease or a list of your suppliers.  

Writing a business plan for your trading business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the trading industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful trading business.  

Trading Business Plan Template FAQs

What is the easiest way to complete my trading business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your trading business plan.

How Do You Start a Trading Business?

Starting a trading business is easy with these 14 steps:

• Choose the Name for Your Trading Business
• Create Your Trading Business Plan (use a trading business plan template or a forex trading plan template)
• Choose the Legal Structure for Your Trading Business
• Secure Startup Funding for Trading Business (If Needed)
• Secure a Location for Your Business
• Register Your Trading Business with the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Trading Business
• Buy or Lease the Right Trading Business Equipment
• Develop Your Trading Business Marketing Materials
• Purchase and Setup the Software Needed to Run Your Trading Business
• Open for Business

What is a Trading Business?

There are several types of trading businesses:

• Retail trading business- sells merchandise directly to consumers
• Wholesale trading business- sells merchandise to other businesses
• General merchandise trading business- sells a wide variety of products
• Specialized trading business- sells one specific type of product

Don’t you wish there was a faster, easier way to finish your Trading business plan?

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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how Growthink’s business plan advisors can give you a winning business plan.

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Trading Business Plan

MAR.12, 2024

According to a report, 13% of day traders maintain consistent profitability over six months, and a mere 1% succeed over five years. This is primarily due to inadequate planning and undercapitalization. A well-crafted trading business plan can help you avoid these pitfalls, and this article will guide you.

In this article, you’ll learn:

• The current trends and growth forecasts in the stock trading industry
• A breakdown of the costs involved in starting a trading company
• The key components of a trading business plan (with a trading business plan example)
• Strategies for securing funding and overcoming the barriers to entry

By the end of this article, you’ll understand what it takes to create a business plan for an investment company , positioning your trading business for long-term success in this lucrative but highly competitive industry.

Pros and Cons of Trading Company

Let’s explore the pros and cons associated with running a trading company before diving into the specifics of a trading site business plan. Understanding them will help you make informed decisions:

• Potential for significant profits.
• Flexibility in terms of time and location.
• Opportunity for continuous learning and skill development.
• High risk due to market volatility.
• Emotional stress and psychological pressure.
• Requirement for constant vigilance and discipline.

Trading Industry Trends

Industry size and growth forecast.

According to a report , the global stock trading and investing applications market size was at around $37.27 billion in 2022 and projects to grow at a CAGR of 18.3% from 2023 to 2030 (Source: Grand View Research). The following factors drive this growth:

• Increasing internet penetration
• Rising disposable income
• Growing awareness of investment opportunities.

(Image Source: Grand View Research)

The Services

As per our private equity firm business plan , a stock trading business offers various services, including:

• Facilitating Trades on behalf of clients
• Algorithmic trading services to automatically execute trades
• Market Insights (research reports, market analysis, and economic forecasts)
• Technical and Fundamental Analysis (price charts, historical data, and company fundamentals)
• Investment Recommendations
• Seminars and Webinars
• Online Courses
• Demo Accounts
• Portfolio Diversification
• Stop-Loss Orders
• Hedging Strategies
• Direct Market Access (DMA)
• Global Market Access
• Trading Platforms
• Mobile Apps
• High-Frequency Trading (HFT)
• Legal and Compliance Services
• Educate clients about Risk Disclosure

How Much Does It Cost to Start a Trading Company

According to Starter Story, you can expect to spend an average of $12,272 for a stock trading business. Some key startup costs include:

How Much Can You Earn from a Trading Business?

Earnings in the trading business can vary significantly and depend heavily on:

• Trading strategy and approach
• Market conditions and volatility
• Risk management techniques
• Capital allocation and leverage

While specific income figures are difficult to predict due to these factors. However, here are some statistics showing the earning potential of a stock trading business:

• According to Investopedia, only around 5% to 20% of day traders consistently make money.
• According to Indeed Salaries, the average base salary for a stock trader in the U.S. is $80,086 per year.
• 72% of day traders ended the year with financial losses, according to FINRA.
• Among proprietary traders, only 16% were profitable, with just 3% earning over $50,000. (Source: Quantified Strategies)

What Barriers to Entry Are There to Start a Trading Company

Barriers to entry into the stock trading business include:

• Regulatory Requirements: Obtaining necessary licenses and registrations from governing bodies like the SEC and FINRA is a complex and time-consuming process.
• Capital Requirements: Trading activities require significant capital to manage risks and leverage opportunities, which can be a substantial challenge for new or small firms.
• Technological Expertise: Developing or acquiring sophisticated trading platforms, algorithms, and data analysis tools is costly and requires specialized expertise.
• Market Knowledge and Experience: Gaining in-depth knowledge and practical experience in the complex and dynamic financial markets takes years of dedicated study.
• Competitive Landscape: Breaking into the highly competitive trading industry dominated by established firms and well-funded proprietary trading desks is challenging for new entrants.

You can overcome these barriers by developing unique strategies, leveraging innovative technologies, and offering competitive and specialized services to differentiate yourself in the market. Do check our financial advisor business plan to learn more.

Creating a Trading Business Plan

A well-researched stock trading business plan is crucial to start a trading business. A general trading company business plan is a comprehensive document that defines your goals, strategies, and the steps needed to achieve them. It helps you stay organized and focused and increases your chances of securing funding if you plan to seek investors or loans.

Steps to Write a Trading Business Plan

You can use a business plan template for a trading company or follow these steps to prepare a business plan for a personal trading business:

Step 1: Define Your Goals and Investment Objectives

Step 2: Conduct Market Research

Step 3: Develop Your Trading Strategy

Step 4: Establish Your Business Structure

Step 5: Develop a Financial Plan

Step 6: Outline Your Operational Procedures

Step 7: Create a Marketing and Growth Strategy

Step 8: Implement Risk Management

Step 9: Create an Exit Strategy

What to Include in Your Trading Business Plan

Executive summary, company overview.

• Market Analysis
• Trading Strategy and Risk Management
• Operations and Technology
• Financial Projections
• Management and Organization
• Appendices (e.g., research, charts, legal documents)

Here’s an online trading business plan sample of ABC Trading:

ABC Trading, a recently established stock trading firm, provides online trading services to individuals and institutional investors. Key highlights of our business include:

• Vision – Becoming a leading online trading platform with a wide range of trading products and services.
• Values – Our core focus is innovation, excellence, integrity, and customer satisfaction.
• Target market – Tech-savvy and risk-tolerant investors looking for alternative ways to invest their money and diversify their portfolios.
• Revenue model – Commissions and fees for each trade, as well as subscription fees for premium features and services.
• Financial goal – Break even in the second year of operation and generate a net profit of $1.2 million in the third year.

ABC Trading is seeking $500,000 seed funding to launch its platform, acquire customers, and expand its team.

Company Name: ABC Trading

Founding Date: January 2024

Location: Delaware, USA

Registration: Limited Liability Company (LLC) in the state of New York

Regulated By: Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA)

Our team comprises seasoned professionals with diverse finance, mathematics, computer science, and engineering backgrounds.

Marketing Plan

Marketing Strategy: We aim to leverage online channels, such as social media, blogs, podcasts, webinars, and email newsletters, to create awareness, generate leads, and convert prospects into customers.

Marketing Objectives:

• Reach 100,000 potential customers in the first year of operation
• Achieve a 10% conversion rate from leads to customers
• Retain 80% of customers in the first year and increase customer lifetime value by 20% in the second year

The customer profile of ABC Trading includes the following characteristics:

• Age: 25-65 years old
• Gender: Male and female
• Income: Above $100,000 per year
• Education: Bachelor’s degree or higher
• Occupation: Professionals, entrepreneurs, executives, or retirees
• Location: US or international
• Trading experience: Intermediate to advanced
• Trading goals: Income generation, capital appreciation, risk diversification, or portfolio optimization
• Trading preferences: Stocks, options, or both
• Trading style: Technical, trend following, or volatility trading
• Trading frequency: Daily, weekly, or monthly
• Trading risk: Low, medium, or high

Marketing Tactics:

• Create and distribute engaging and informative content on social media platforms
• Offer free trials, discounts, referrals, and loyalty programs
• Collect and analyze customer feedback and data to improve and personalize the customer experience
• Partner with influencers, experts, and media outlets in the trading and finance niche

Marketing Budget:

We will allocate $10,000 for our marketing campaign, which we will use for the following purposes:

Operations Plan

ABC Trading’s operations plan ensures the smooth and efficient functioning of the company’s platform and services and compliance with the relevant laws and regulations.

Operation Objectives:

• Maintain a 99% uptime and availability of the company’s platform and services
• Ensure the security and privacy of the company’s and customers’ data and funds
• Provide timely and professional customer support and service

Operation Tactics:

• Use cloud-based servers and services
• Implement encryption, authentication, and backup systems
• Hire and train qualified and experienced customer service representatives and technicians
• Monitor and update the company’s platform and services regularly
• Follow the best practices and standards of the industry and adhere to the applicable laws and regulations

Operation Standards:

• Test and verify the quality and reliability of the company’s platform and services before launching and after updating
• Document and report any issues, errors, or incidents that occur on the company’s platform or services
• Resolve any customer complaints or disputes in a timely and fair manner
• Maintain a record of the company’s operations activities and performance

Financial Plan

ABC Trading’s financial plan is to provide a realistic and detailed projection of the company’s income, expenses, and cash flow for the next three years, as well as the key financial indicators and assumptions that support the projection.

Financial Objectives:

• Achieve a positive cash flow in the second year of operation.
• Reach a break-even point in the second year of operation.
• Generate a net profit of $1.2 million in the third year of operation.
• Maintain a healthy financial ratio of current assets to current liabilities of at least 2:1.

Financial Assumptions:

• Launch its platform and services in the first quarter of 2024
• Acquire 10,000 customers in the first year, 20,000 customers in the second year, and 30,000 customers in the third year
• Average revenue per customer will be $50 per month, based on the average number and size of trades and the subscription fees
• Average operating expense per customer will be $10 per month, based on the average cost of salaries, rent, utilities, marketing, and legal fees
• Pay a 25% tax rate on its net income
• Reinvest 50% of its net income into the company’s growth and development

Projected Income Statement:

Projected Cash Flow Statement

Projected Balance Sheet

Fund a Trading Company

To successfully establish and operate a trading company, raising funds to finance daily operations and business expansion is crucial. There are different ways with their advantages and disadvantages:

1. Self-funding (Bootstrapping)

Self-funding, also known as bootstrapping, is when the founder or owner of the trading company uses their own personal savings, family business ideas , assets, or income to finance the business. This is the most common and simplest way to fund a trading company, especially in the early stages.

• Complete ownership and control
• Flexibility in decision-making
• Potential for higher long-term returns
• Limited access to capital
• Personal financial risk
• Slower growth potential

2. Debt Financing

Debt financing involves borrowing money from lenders, such as banks, credit unions, or microfinance institutions, to fund the trading company’s operations. The borrowed funds must be repaid with interest over a specified period.

• Retain ownership and control
• Potential tax benefits from interest deductions
• Disciplined approach due to repayment obligations
• Debt burden and interest payments
• Collateral requirements and personal guarantees
• Difficulty in securing financing for startups

3. Angel Investors

Angel investors are wealthy individuals who invest their own money into early-stage or high-potential trading companies in exchange for equity or convertible debt. Angel investors typically provide smaller funding than venture capitalists and offer mentorship, guidance, and access to their network.

• Access to capital and industry expertise
• Potential for additional mentorship and guidance
• Lower risk compared to traditional investors
• Dilution of ownership and control
• Potential for conflicting visions and expectations
• Limited resources compared to larger investors

4. Venture Capital (VC) Funding

Venture capital firms are professional investment firms that provide capital to high-growth startups in exchange for equity ownership. They typically invest large sums of money and are active in the company’s management and strategic direction.

• Access to substantial capital for growth
• Expertise and industry connections from the VC firm
• Validation and credibility for the business
• Significant dilution of ownership and control
• Intense pressure for rapid growth and return on investment

Depending on your business model, goals, and needs, you may also consider other options, such as grants, subsidies, partnerships, etc. Ensure to check for relevant documents, like the hedge fund private placement memorandum . The best way to fund your trading company is the one that suits your situation and preferences.

OGSCapital: Your Strategic Partner for Business Success

At OGSCapital, we specialize in professional business plans that empower startups, established companies, and visionary entrepreneurs. With over 15 years of experience, our seasoned team combines financial acumen, industry insights, and strategic thinking to craft comprehensive plans tailored to your unique vision. Whether you’re seeking funding, launching a new venture, or optimizing your existing business, we’ve got you covered.

If you have any further questions regarding how to write a business plan for your trading business, feel free to contact us. Our team at OGSCapital is here to support you on your entrepreneurial journey. You can also check our hedge fund business plan sample here.

Download Trading Business Plan Template in PDF

Frequently Asked Questions

What does a trading business include?

A trading business involves trading stocks and other financial instruments under a legal business structure. It includes:

• Market analysis
• Trading strategy
• Risk management

How does a trading company work?

A stock trading company facilitates the buying and selling of stocks (shares) on behalf of investors. These companies operate within stock exchanges, executing trades based on specific trading strategies.

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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Trading Plan Template & Examples: Step-by-Step Guide to Creating a Solid Trading Plan

Bonus Material:

Trading plans are an important part of any trader’s toolkit. The problem is, most traders don’t actively lay out a plan before they begin trading.

The result? They lose money and wonder why . Furthermore, many traders don’t know how to create a trading plan , or what to include.

Successful traders understand that trading plans are crucial to profiting consistently. In this article, I’ll walk you through creating your own plan, step-by-step, plus you can get a head start by using my free trading plan template, download below :

What is a trading plan?

A trading plan is an integral part of a trader’s strategy, outlining how trades are executed. It establishes rules for buying and selling securities, position sizing, risk management, and tradable securities. By following this plan, traders maintain discipline, consistency, and leverage proven strategies.

Why you should create a trading plan

Ask a new trader what they intend to do before the trading day and then ask them what they did at the end of the day. They almost certainly didn’t follow their plan. 

Trading plans are there for us to follow. Trading plans mean we take trades that are consistent with our rules and risk, and it means we remove a lot of emotion and discretion . This is important because humans are not rational agents and outsourcing this work means we can achieve a better P&L and make more money. 

A trading plan should resemble a business plan. A trader’s capital is their business and so we need to include everything that might be useful, but it should always cover the below.

What to include in your trading plan

• The time required to spend on your trading

Your trading goals and targets

• Your risk tolerance and risk management rules

Available capital for trading

Specific markets you wish to trade, the trading strategies you’ll use, your motivation for trading.

Read more information on what to include in your trading plan (with examples) below, and download your free template here:

The time required for trading

We need to define the time we need in order to trade successfully. For example, if you’re in full-time employment, then it’s unrealistic to spend six hours a day trading the market.

For example: Here is a part of my trading plan…

“To trade the UK stock market on a full-time basis I realistically need to spend at least 8-10 hours per day in order to take advantage of intraday opportunities and manage open positions in real time”.

It’s important to set realistic targets in trading. Once you have a target, you can reverse engineer how to achieve it.

For example: A target of increasing a trading account by 20% is an achievable target. To do that, we need to look at our trading capital and work out which trading strategies we’ll use.

Using breakouts to trend follow is a strategy I have had much success with, and I explain how I do this in my guide to breakouts.

There are several trading styles:

• Swing trading: This is a common strategy that attempts to capture moves over several days or weeks. Swing traders look for shorter term trends and then move onto the next trade.
• Momentum trading: This is a trend-following strategy based on upward movement and momentum. It can be a successful strategy over months and years as the stock continues to move higher. This is often coupled with increasing fundamental strength and accelerating earnings.
• Scalping or intraday trading (also known as ‘day trading’): Intraday strategies refer to trades placed and closed within the same trading session. 

Your risk tolerance and risk management rules 

Risk management is the most important part of trading. Position sizing is the first and last line of defence in our trading accounts.

If you take position sizes with 20% of your account, then that means you are risking 100% of that position every time it is risked in the market. Even if the chances are 99%, then eventually that 1 in 100 chance of the stock going to 0p and losing 100% of the position will happen.

Whilst a 20% drawdown on the trading account isn’t fatal, the law of compounding means that we will now need to gain 25% of our account just to get back to where we started. 

Never underestimate the numbers here – a 33% drawdown requires a near 50% gain just to get back to where we started. 

It’s important to put in place risk management rules that will protect the account and prevent us from taking on too much risk.

Only you will know how much risk you’re willing to take, but if you put yourself in a position where you could do yourself material damage, then eventually that outcome will be presented.

If taking a loss hurts, then it means you are trading too large. Most traders blow their accounts due to overexposure. I’ve never heard of a single trader who blew their account due to continuously taking small losses. Position sizing and risk management is covered in detail in my trading handbook.

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Traders should always be clear about what money should be used for trading and what money should stay in their bank accounts. 

Far too many traders have drawdowns in their trading accounts and decide to top up their account with a bank transfer.

Unfortunately, they end up putting far too much money into their account and do not keep track of their losses.

You should never trade with money you can’t afford to lose. I’ve had emails from people asking me what to do because they’ve lost the deposit for their house and they haven’t told their partner. Sadly, there is little that can be done at that point because the money is already lost.

In your trading plan you should be clear about how much is going into your trading account and how much you will top this up each month if that is going to be your strategy to grow your account further. 

However, the best way of growing your trading account is by making money trading successfully in the market. Once you can consistently do this, then it makes sense to increase your funds and scale up. 

A trading plan should also include the specific markets you wish to trade. Do you plan on trading UK stocks, US stocks, foreign exchange (forex), or cryptocurrencies? Once you’ve picked a market, you still need to drill deeper. 

For example: If you pick UK stocks will you trade all of these, or just AIM, or just the Main Market? Will you trade only small cap stocks? Will you trade both SETS and the SETSqx platforms ? 

In my case, I trade all UK stocks, and don’t discriminate between any of them. However, my focus is on smaller stocks under £500 million market cap. 

Your trading strategies are the ways you are going to make money. This part of the trading plan is important because by defining your strategies it will be clear to follow.

For example: I want to trade small-cap stocks that have momentum behind them, and I will find this momentum through technical breakouts and positive RNS announcements.

I will trade gaps and also place orders into the auctions in order to get better fills. I will use various brokers for different types of execution. I will take secondary raises that have news catalysts that can potentially drive the shares higher.

What is your why? What are your goals, and what is your motivation? Trading is hard and there are ups and downs – it’s easy to motivate yourself when the going is good and you’re making lots of money. But it can be harder when you’re suffered several losses in a row, and you keep seeing your account grind lower or flat for weeks on end. 

Writing down your why will make it easier to stay focused and commit to the long-term process and improvement.

For example:

• I want to trade because I enjoy the challenge and I also want to be my own boss.
• I want the freedom that comes with the lifestyle of a full time trader and I want to be around my wife and future children as they grow up.
• I want to offer my family a better life, and by continuing to work on my skillset is putting me closing towards my goals.

Good trading plan example

How do you write a trading plan?

• Know your trading playbook
• Manage your risk 
• Have a realistic profit target

1. Know your trading playbook

You should have a playbook of trades that you know how to execute in the market. A playbook is a list of trades, each with step-by-step instructions on how to trade the pattern. 

If you don’t know what you should trade in your trading plan then building a playbook of trades is a good place to start. 

2. Manage your risk

Risk management is a crucial skill for any trader. I’ve written an in-depth article on trading risk management for further information.

The reason risk management is so important is that without it we would blow up our accounts. Nobody would think about driving a car with no brakes because it would obviously crash – risk management is the brakes and safety system for our trading accounts.

Everyone has different risk profiles. Some are happy to take on high amounts of risk accepting that they may take hefty losses in order for the possibility of excess return. 

Full-time traders like myself tend to be more cautious knowing that if they lose too much capital, they may have to go back to work. 

You should include in your trading plan how much you’re prepared to risk on particular trades in your playbook and how much in your account overall.

3. Have a realistic profit target

Having an idea of a profit target will mean that you don’t end up falling into the trap of never selling. Far too many traders watch a stock rise, see it pullback, then immediately regret not nailing down profit into strength.

By setting out clear take profit targets this avoids indecisiveness and will ensure you execute ruthlessly. 

Bonus tip: Trade the stocks in play

Trading is about being in stocks that are moving. Volatility is the lifeblood of a trader, and a dead stock means dead money. 

The stocks ‘in play’ are the stocks that have moved or are moving in recent sessions, and the stocks we should be immediately keeping tabs on. Stocks can cycle in and out being in play, and so we need to keep track of those that offer the greatest volatility to trade.  

Download my free one-page trading plan template

My opening plan trading template has everything you need to begin the trading day. It forces you to check and review your open positions, so you’re always knowing what to do. 

It also suggests to list the current stocks in play, and how you can trade them, and in what size. Additionally, it asks “What can happen?” so a trader using this template will never be caught out.

By thinking ahead about potential scenarios and how to trade them, this gives the trader an advantage over others who do not put the work in. Traders who punt around their money without a clue or a plan are commonly referred to as “liquidity”.

To download the free template, click the button below and follow the instructions.

About The Author

Michael taylor.

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Trading Basics

• Order Types
• Money Management
• Day Trading Salary
• The Pattern Day Trading Rule
• Stock Earnings
• Trading Patterns

Chart Patterns

• Candlesticks Explained
• 6 Bullish Candlesticks
• 8 Bearish Candlesticks
• Doji Candlestick
• Double Bottom W
• Symmetrical Triangle
• Ascending Triangle
• Descending Triangle
• The Bear Trap
• The Golden Cross
• Head and Shoulders

Trading Strategies

• How to Use Scans in Day Trading
• How to Trade the Head and Shoulders Strategy
• How to Create a Trading Plan
• Options Trading Guide for Beginners

More Education

• Day Trading Blog
• The SimCast Podcast
• Stock Trading Indicators
• Trading as a Business
• Trading Psychology

Trading As A Business

Answers to all your questions about how to get started with your trading business..

• What Is A Trading Business?

Why You Need A Trading Business Plan?

• Your Trading Purpose
• Your Trading Process/System
• Risks/Costs of a Day Trading Business
• How Much Starting Capital Do You Need For Your Trading Business?
• Define Your Trading Team
• How To Grow Your Trading Business

How to Start a Stock Trading Business

What is a trade book, what to include in your trade book, day trading computers and monitors, parting thoughts on starting a day trading business.

• PARTING THOUGHTS

How To Set Up A Stock Trading Business From Home

Not many people approach stock trading like an ordinary business. Sure, they want to make gobs of money, and fast. But, rarely do you see the budding day trader plan out his trading business like he would any other brick and mortar startup. Perhaps this is why there are so many casualties in this industry – because very few treat day trading as a serious business.

It is no surprise. There are a myriad of advertisements across the internet offering get-rich-quick opportunities in the market. Gurus and furus offer their services for a nominal fee and promise millions, just like their best students have made. Heck, they even show you their brokerage statements to prove it!

But is it that simple? And what structure do these services provide for you? Do they teach you how difficult the path to success will be? Do they tell you how many students have dropped out of their programs on account of failure?  

Better yet, do they provide a structure and a framework for how to plan your career, much like you would a business?

Day trading without a true business plan is a lot like gambling. You say to yourself, I’m going to throw my life savings at these internet gurus’ wisdom and hope for the best. A year later, you’ve probably coughed up half your savings, if you’re lucky to still have any.   

Let’s just hope you kept a side gig in the process.

Such is the plight of many aspiring entrepreneurs in the trading world, unfortunately. So, in this post, we’ll lay out for you just how treacherous the path can be, and offer you a better structure to kick-start your trading business.

What Is a Trading Business?

  A trading business is like any other business. You may decide to incorporate or act as a sole proprietor. Regardless, starting a day trading business is very simple. All it takes is applying with a brokerage and loading money into your trading account. For that reason, it can be a dangerous business to start, with such a low barrier to entry.

Just like any other endeavor, you’ll be required to pay taxes on your profits. However, there are certain limitations to the tax rules for day trading that you should be aware of. We will touch on these in a moment, but suffice it to know that like other businesses, you will need to be aware of what write-offs can apply to your business along with the short and long-term capital gains you’ll be responsible for.

Unlike a brick-and-mortar business, you don’t need anything but a computer or mobile device to start a trading business. You won’t have the expense of restaurant equipment, medical malpractice insurance, or the headache of managing employees. These days you can place a stock order with iPhone apps or more advanced trading software on computers. That and an internet connection are all you need to get started. Literally.

But just as buying stoves and ovens, tables and chairs, and having the best recipes in the world won’t guarantee a successful restaurant business, so having the best computer, broker, or guru won’t guarantee you’ll make money in the market.

Why You Need a Trading Business Plan?

One of the most overlooked, yet most important parts of a successful trading business, is the trading business plan. Why do you need a trading business plan? For a handful of reasons:

• It will force you to research your business and the likelihood of success.
• A trading business plan will help you stay grounded with realistic expectations.
• During the rough times, it will guide you into re-evaluating your process.

What Are the 6 Elements of a Good Trading Business Plan?

Every business needs a business plan. Usually, you’ll have an executive summary, description of your team, products/services, market outlook, financials, etc. But for trading, the variables are a bit different. Your team is really just you, with some exceptions. Your product is your trade plan, and your financials are just your available capital. Let’s look at each of the 6 elements of a good trading business plan more in-depth:

1. Your Trading Purpose

We’re big proponents of purposeful trading. Everyone’s “why” is going to be different, but it’s important to lay this out. It doesn’t have to be for anyone but you. That being said, the more you think about why you want to trade, the more it should motivate you to succeed at it. Every entrepreneur has a why or a purpose for what they do. Could it be as simple as “making more money?” Sure. But we’d encourage you to dig a little deeper and find more than just that. Here are some examples of why you might want to start a trading business:

• To work for yourself
• Increase wealth
• Learn a new skill
• Spend more time at home
• Be available to your family and friends
• Have the ability to give more
• Pay off debts

There are many reasons why people trade. Spend some time thinking about why you want to start a day trading business and write this down, mull it over, and expound on it. The more concrete your reasons become, the more tangible your efforts will be to achieve success.

Think of them like outcomes. Sure, profitability is the ultimate goal. But what does profitability afford you? Time? Love? Charity? This should be the start of your trading business plan.

2. Your Trading Process/System

Would you open a new restaurant without a menu? How about a proven recipe? Would you just run to the grocery store every day and cook up whatever you felt like that night? Absolutely not. Restaurants work well if they are scalable in a very systematic way. It all starts with the layout of the kitchen. The grill is on one side, the sauté in the middle, and the food prep, washing and storage in another area. Depending on how fancy you get, you’ll have a salad prep, dessert, coffee area, etc. It’s all designed to flow in a cyclical rhythm to keep things running smoothly.

The menu also very rarely changes in restaurants, unless the chef adds a special here or there. And the recipes are often guarded secrets that never change. Perhaps seasonal offerings will vary, but the staples of the restaurant are usually known and predictable. So should your trading system be . In your trading business plan, you must lay out not only the strategies you will use, but in what type of market those strategies will work well. Get the seasonal allegory there? You see, trading the markets is a lot like other businesses in that the more systematic you are the more consistent you’ll be, and the more your patrons (your profits) will want to come back and dine with you. Screw around with too many recipes (strategies) at once, come to the market disheveled, unorganized, and unprepared, and you’ll end up with a kitchen in chaos, customers walking out the door, and your profits disappearing. It has to be a well-oiled machine. To avoid chaos, this section of your trading business plan should involve a Trade Book. We’ll discuss your trade book more in-depth below.

3. What Risks/Costs Are Involved in a Day Trading Business

Starting a new business is risky. There’s no way around it. If you want to get ahead in life, you’re going to have to risk something: money, time, failure, other opportunities. Humans crave security. But trading markets doesn’t provide that. It provides uncertainty. Now, you may be thinking that if you make a million dollars in the stock market then you’ll have security. And that may be true. However, the odds of success are not in your favor. And as a rule of thumb, the market is a game of uncertainty at its very core. In order to win, you must learn the science of probability and the need to overcome your own human emotions . Couple that with an artistic sense of intuition and discretion, along with a favorable market condition, and you might be successful. As part of that, outlining what risks and costs are involved in your day trading business would be a good place to start. We recommend that you consider the following when calculating your risk/costs

• Computer and other hardware costs
• Software fees, charting tools, scanning software, etc.
• Broker fees: commissions, short locate fees, ECN fees, etc.
• Educational courses, books, and materials
• Chat room/mentorship subscriptions or service fees
• Maximum drawdowns in your account
• Time associated with being in the market (9:30am - 4pm EST)
• Extra time devoted to review, study, and analysis
• Re-investment of capital
• Funds to top up your account
• Time frame needed for profitability (Most traders, like businesses, take 2-4 years.)

These are just some of the costs and risks associated with trading. If you end up with a catastrophic loss, how will that impact your trading business plan?

While there are many free resources available to traders, we’d venture to say that most traders will spend many thousands of dollars just learning how to trade – not to mention how much they lose in the markets.

Obviously, we’re big proponents of learning how to trade the safe way – in a simulator . Unfortunately, most new traders like to learn the hard way. Whichever way you go, we encourage you to keep your costs and risks in check. Outline them and budget for these items long before you pull the trigger on your trading business.

4. How Much Starting Capital Do You Need For Your Trading Business?

Before we answer this question, we cannot stress enough how important it is to first PROVE that you can trade consistently in a simulator for many, many months. Funding your trading account is not the first thing you need to be thinking about. Spending time in a simulator is the first thing you need to think about. Period. Spend the time necessary to backtest and outcome test your strategies in our analytics here at TradingSim. You can trade the market for the past 3 years at any time, testing your strategies. Once you’re successful and consistent, then think about funding your account. There, now that we’ve gotten that out of the way, let’s talk about funding your account.

What Is the Pattern Day Trading (PDT) Rule?

Assessing how much money you need to start with depends largely upon your financial standing. The Pattern Day Trading rule was enacted shortly after the bull run of 1999-2000. It limits how many day trades you can make within a 5-day period to only 3 — that is, if you’re account is below $25,000. This is something to consider when you fund your account. If you plan on day trading, starting above $25k might be wise. That being said, we’re big proponents of proving to yourself what you can do in the market before you add to your account. We’ve written before about the PDT rule and ways around it . There are options like offshore brokerage accounts, opening multiple US-based cash brokerage accounts, etc. We won’t dive into that here, but if you’re unfamiliar with these options, be sure to check them out. As a general rule, start small. Start small enough that your account can grow without the headaches of forced errors due to having a small, restricted account. But not big enough that it will cost you dearly if you make rookie mistakes. And trust us. You’re going to make rookie mistakes. Plenty of them.

Generating Income During Your Early Trading Days

For your business trading plan, be sure to outline what you will do for income. It takes most traders many years to reach consistency in the markets. And by consistency, we mean being able to not only make a living but also continue to bankroll your trading account. To that end, take the stress off your shoulders by trading part-time until certain goals are reached. Or, if you decide to go full-time, be sure to outline your expenses, and the amount of savings you will need to set aside for 1-3 years of ups and downs in the market. In addition, lay out your contingency plan. Define ahead of time what you will need to do if certain milestones aren’t reached. Lastly, discuss this with your partner. There’s nothing worse than having your family responsibilities jeopardized because of a whimsical and ill-planned trading business. As the saying goes, err on the side of caution. Imagine the worst, then double that, then add a little more on top. That’s the kind of “risk” cushion you need for your trading business.

5. Define Your Trading Team

Every good business has a good team. Whether it is a board of directors, consultants, or management team; the best businesses have good leadership. Organize your trading business the same way. Granted, your trading business won’t be structured the same way your normal business is structured. You’re the only one responsible for clicking the buy and sell button in the market. However, there are people you can add to your team to help you along the way.

How To Find a Good Mentor for Trading

Finding a good mentor in stock trading is easier to find nowadays. There are a lot of “mentorship” services available online. Not all of them are created equally, though. When you’re searching for an educational service or mentorship, we recommend taking your time. Think of it like car shopping. The best car buyers do their research online first, narrow down what they want in a car: brand, price, color, miles, trim level, etc. Then, it is a matter of heading to the dealership to test drive, ask questions, etc. Just like a dealership, you’re going to find hungry salesman wanting “to do business with you today!” But you need to be on guard. It’s your money, your experience, and ultimately your decision. Stand your ground and always take everything with a grain of salt. Look at online reviews like TrustPilot. Ask around on Twitter. Look under the hood with “trial” memberships. Really do your due diligence. Yet, understand that no mentorship or educational service is going to be perfect. In fact, you should go into each educational service expecting to learn something new from as many mentors as possible. In this way, you’ll learn that your biggest asset is being your own trading coach. Now, to bring this full circle for your trading business plan, do your research first. Outline the top 10 trading educators you can find. Exhaust yourself with the effort, then narrow down your results to the top 5. Start there, and give yourself time to work through your list. In your trading business plan, identify which services you will try and which ones you might avoid. Also, include non-trading mentors in your business plan. Perhaps your spouse, a close business friend, or a confidant can provide a fresh perspective. And one of the best ways to find a team is by picking up trading buddies along the way. All of these educational services have tons of people just like you. Reach out to them and try to connect! We would also be remiss to not recommend a good psychology coach. We’re big fans of Dr. Brett Steenbarger and his books. Don’t go without them.

6. How To Grow Your Trading Business

This section of your trading business plan may not fully materialize until you are well on your way to consistency in trading. You see, the path to success in trading looks something like this:

• Make a little
• Profit more
• Make big money

You won’t really know how to make big money unless you find a system that is scalable. In fact, many millionaire day traders find themselves at a place in their career where they have to adjust their strategies because their accounts have become too big for the strategies they used when their accounts were smaller.

While this isn’t something you should worry too much about early in your career, it should be in the back of your mind.

Typical businesses require some form of marketing to grow, right? Not only that, but they need a scalable system. Build a successful restaurant, systematize its operation, then you can turn it into a franchise. Voilá!

Trading is very similar. The market is all about compounding your profits. When you find a scalable trading system, you’ll want to spend the necessary time growing it. This requires having the right strategy, the right risk management , proper experience, and the emotional capacity to trust your system despite larger account swings up and down.

Keep this section of your trading business plan open. Add to it as you evolve as a trader and your strategies evolve. Conduct research on what the largest players in the market do to compound their large gains.

Now that we’ve outlined the 6 best elements of a successful trading business plan, let’s get into the nitty-gritty of creating your day trading business. We’ll uncover topics like how to create a trade book, the best tools for your trading business, and more.

Create A Trade Book for Trading Strategies

Essential to your trading business is your trade book. Aside from your trading business plan, this is hands down the most important part of your trading business. Every trader should have one.

A trade book is a compilation of your trading education, style, strategies, statistics, rules, and more. It is a road map for where you want to be as a trader, and how you are going to get there. It will take a lot of the guesswork out of trading and ground you in a tested strategy. That is not to say that your trade book is set in stone. It will undoubtedly evolve as your career progresses. Along the way, you’ll want to add bits of information, evolved strategies, and more. A trade book should be a document that you keep handy and consult frequently to ensure that you’re trading according to the process you have outlined for yourself. This will keep you from the pitfalls of overtrading, trading less than stellar setups, and falling off the bandwagon into “style drift”.

Everyone’s trade book will be different. However, at a minimum, you should have all the criteria and information you need to execute trades successfully each and every day, from start to finish.

Here are a handful of items you should have in your trade book:

• Your trading “why”
• Education materials
• Current areas of improvement needed
• Your trading edge/strategy
• Trading rules for your strategy
• Money management rules
• Trade management rules
• Best trade examples with annotations
• Worst trades with annotations
• Any data or statistics to support your trading edge

Let’s take a look at a few examples of these 10 trade book chapters and how you can flesh them out for your own purposes.

1. Areas to Improve and Maintain Discipline

This section of your trade book will need to be updated from time to time as you grow as a trader. The goal here is not to be hard on yourself, but to be realistic with the weaknesses you are showing in your trading.

Here is a snapshot of a personal list of things that this author wrote in his own trade book:

• Tendency to enter trades before technical criteria are met
• Exhausting myself before the move I want occurs
• Limiting my profits by being happy with getting back the money I lost on the trade
• Going in with too much size without the A+ setup revealing itself
• Lack of patience and management once a trade is going in my favor
• Impulsive entry or exits based on time frames that are too low to base decisions off of
• Making decisions based upon p/l
• Internalizing bad performance
• Overtrading in an effort to time the entry perfectly
• Being aware of the Alpha mindset that wants to force trades
• Resetting after every trade
• Breathing exercises for calmness and relaxation

As you can see, there are a lot of issues facing traders. Some of these may affect you, or you may have your own set of struggles to overcome. As you trade, keep a journal to jot down the weaknesses you want to work on, and set a goal each week to tackle those issues.

2. Explaining Your Edge/Strategy in the Market

This is another important aspect of your trading book, perhaps the most important. The goal of your trade book is to define how you trade, what you trade, and when you trade so that you stay rooted in a systematic approach to your trading business.

Your edge will vary, but here is an example of what your edge description might look like in your trading book:

My edge is a combination of things that involve a certain sentiment on the daily time frame, followed by smaller time frames. Here are a handful of what I consider my edges:

• Reversals off daily/weekly moving averages, usually in bear or bull flag formations.
• Trading Range springs and upthrusts, or Mean Regression trades
• Wyckoff Wave Patterns that consolidate into a tight price action with Volume Dry Up (VDU) and pocket pivots as entry points waiting to take off.
• Parabolic reversals intraday
• Shorting manipulated low float stocks that are very extended

Within these, my trading strategies for entries remain the same as outlined below in the Trading Plan section. I am looking for the exact same entries on any time frame.

Once you broadly define your edge like this, you will also create a solid trade plan on how you execute these strategies. But before we get to that, you should also take the time to set your trading rules.

3. Trading Book Trading Rules

For your trading rules, we suggest you take time to think about what time you’ll trade, your position size, any mental hacks you need, stop loss criteria, and more. These can be broad or very specific. It will be up to you to tweak this over time to find the set of rules that work best for you.

A great example of a set of rules for trading is found in a book called The Complete Turtle Trader by Michael W. Covel. In this book, Covel uncovers the amazing story of how a small group of traders became millionaires by applying to Dennis Richards's experiment for training traders to become successful by following his strategies.

Richards was a floor trader for the Chicago Mercantile Exchange who made 10s of millions of dollars in the 70s and beyond. His “turtle traders,” as he called them, were given a set of rules to follow that looked like this:

• Entry: Buy when the price breaks above the 20-day high
• Stop loss: 2 ATR from the entry price
• Trailing stop loss: 10-day low
• Risk management: 2% of your account
• Vice versa for short trades

They were trend traders and the rules were very simple. However, your rules might be very different and more involved. Here is an example of a few typical rules that traders like to follow:

• Always cut your losses quickly
• Never average down on a losing trade
• Take profits at 20-25%
• Maintain at least a ⅓ risk/reward ratio

Again, this is just a small sampling of rules. It will be up to you to determine the rules you need in place for not only your strategy but your mindset and personality as well. This will help you keep your trading business going for the long haul.

4. How to Create a Trading Plan

• Daily Max Loss
• Daily Profit Goal
• Stock Change %
• Stock Catalyst
• Volume Metrics
• Average True Range
• Relative Volume
• Indicators needed
• Confirmation of strategy
• Entry Signal
• Trade Management Rules

Fill out all these metrics and you’ll be well on your way to having a solid trading plan. Be sure to really flesh out the details of each criteria, and then give examples of trades that fit these criteria.

To help visualize this, here is a snapshot of a trade book trading plan:

5. Money and Risk Management for Your Strategies

No trading plan is complete without defining your money and risk management protocol. Every trade might be slightly different, but as a rule of thumb, we recommend only risking about 0.5-2% of your entire capital on any given trade.

Here is an example of how you might define your risk management strategy for shorting a head and shoulders pattern:

Risk Per Trade : $450 or HOD, whichever comes first

Profit Target Per Trade : $1000 +

Max Loss Per Trade : $750

Trade Limits :

• Give the stock enough time to bounce and fail and return back into the trading range.
• Look for a squeeze before a drop if the stock feels weak
• The earliest entry can be on an “undercut and rally” or “overthrow and drop” if momentum is really waning.

Time Constraints : Pre/Post and Normal hours depending on volume, after 10:30am usually the best

Stop Loss Mechanism : Hard stop just above High of Day (HOD) and LOD on early entry. Hard Stop just above higher low / lower high on “right shoulder” entry.

Break-even Win% : This will depend on your statistics with the trading strategy.

6. Use Statistics in Your Trading Book

One of the absolute best ways to determine your chances of success on a strategy is to test it in a simulator by outcome testing your results. At TradingSim, we have the analytics that allow you to do just that.

As you test your strategies and begin to populate your trading book, be sure to include the statistics you’ve found in the simulator for each edge that you document.

Studying your winners and losers based upon the specific strategies you use will give you the confidence to take these trades in real life. So be sure to specify your win rates and any caveats for your strategy by testing these outcomes in a simulator first.

If you’re going to be a day trader, you’ll need a decent computer and a monitor. While we’ve heard of people day trading on their phones or iPads, it’s less than ideal. The reason for this is that you need to not only be able to analyze charts in real-time, but you may need to check other data as well. You’ll need screen space for your broker, your charting platform, any newsfeeds or chat rooms, twitter, etc. A solid computer and multiple monitors make this more efficient. Likewise, you’ll probably want multiple chart windows up simultaneously. This helps you keep track of the movements in individual stocks as the day progresses. Not having screen space for this might result in missed trades. And we wouldn’t want that!

Day Trading Stock Brokers

While we are not in the business of recommending stock brokers, this will be a key component of your trading business, so the decision shouldn’t be taken lightly. We recommend that you try many different brokers and do your own research before pulling the trigger on one.

When you are picking the right broker for day trading, you want to consider the type of trading you want to do. For example, many day traders like to short. In order to do this, you will need a broker with a solid list of shortable stocks. Not every broker will have this.

Consult with your broker and ask around the net for answers to some of the following questions:

• Do you have a good list of hard-to-borrow stocks?
• What trading platform do you provide?
• Are pre-market and after-hours trading allowed?
• What are trade cut-off times?
• Do you have margin, and what are the rates?
• What is customer support like?
• Does the platform include a mobile app?

At the very least, you should be able to demo their product to get a feel for it and decide whether or not it is a good fit for you and your trading style.

Charting and Trading Platforms

While many brokers will include a charting and trading platform, you may find that their charts don’t satisfy your needs. After all, there are quite a few standalone charting services available that cater specifically to charting, regardless of brokers or trade execution. Many traders will run their charting platforms as a standalone so that they can employ unique trading indicators and technical analysis tools that their broker might lack. This can empower your trading, enabling you to dive deeper into volume and price action without needing a clunky brokerage chart. It also frees you to choose which broker might provide the best service or execution independent of their software.

Trader Tax Accounting

There are two things guaranteed in life, death and taxes, right? Well, day trading has the potential to rack up a lot of taxes, so you’re going to need an accountant who knows what they are doing. Making a few investments here and there can easily be handled by your typical CPA. However, there are a lot of rules and regulations involved with actively trading. Wash/sale rules, what constitutes an active trader, marked-to-market rules, and many other things can affect your status and tax liability as a day trader. For that reason, we recommend you hire a professional who knows what they are doing before you jump into trading. Be sure to consult with them on your other businesses, how much you plan to trade, and any other income sources you have. While we don’t recommend any specific accountant over another, there are a few trading-specific accountants that we know of: https://tradersaccounting.com/ https://tradertaxcpa.com/ https://greentradertax.com/ Use them at your own discretion and risk, but understand that reconciling thousands, if not hundreds of thousands of trades, takes specialized software and accounting. You might be able to figure it out on your own by using https://www.tradelogsoftware.com/ . But the help of a knowledgeable accountant is always advantageous.

Finding a Day Trading Community

Day trading is a lonely business. You’re sitting at your desk for hours on end, pouring over charts and data. Not only that, but you will experience emotional highs and lows during this process. To that end, we recommend that you find a good day trading community to support you. We’ve written before on chat rooms and how to make the most of them, so be sure to check that article out. In it, we discuss the role that chat rooms play in the market and in trading development. Not all chat rooms or educational services are created equally, though. So, be sure to vet services properly and as inexpensively as possible until you find one that resonates with your style of trading and social interaction. Being a part of a community also serves as an accountability tool in the market. A good business will likely have some type of review board that oversees and provides accountability for the business. In trading, you’re responsible for your own actions. And, for that reason, it would be ideal for you to have a trusted group of trading partners that you can bounce ideas off, conduct review sessions, and keep yourself on track both mentally and professionally.

The Best Simulation Software for Your Trading Business

While we may seem biased, we truly believe that this piece of the puzzle is one of the most important and overlooked aspects of day trading. So many traders are willing to risk their hard-earned cash before they have a proper understanding of how markets work. It is irresponsible and risky, at best.

Here at TradingSim, we offer the best simulator for market replay , simulation, and analytics. Unlike most stock market simulators, we allow you to replay Level 2 and intraday data for up to 3 years. As a day trader, you’ve got the ability to “relive” the market as much as you want, and when you want.

Because day trading can be both systematic and discretionary, you’ll enjoy the built-in analytics software that TradingSim offers. In order to test your trading skills and outcome test your performance on a specific strategy, you’ll need this. Any great trader knows the power of statistics. Be sure to spend time in the sim testing your process before entering the market with real money.

Not convinced? Don’t take our word for it. The most prolific trading psychologist in the world has this to say about simulation trading:

Indeed, it’s often because of our need to make money and our overconfidence that we pursue shortcuts in our learning processes as traders and take too much risk. That leads to volatility of P/L and losses, which in turn trigger our nervousness, tension, stress, fear, and worry.

What I’ve long liked at TradingSim is the focus on learning trading–and doing that in safe ways where we can’t trigger and traumatize ourselves.

Think about every performance field: athletics, acting, music. In none of those do we start out by following people online, doing some reading, and then trying to make a living from our performance. Rather, we recognize that it takes years of practice and mentoring to become a professional athlete, movie star, or recording artist.

When we take shortcuts in the development process, our unrealistic expectations set us up for disappointment, frustration, and pain.

Many, many times the answer to emotional disruptions in trading is to work on our trading.

Dr. Brett Steenbarger, Ph.D.

What Are the Best Day Trading Courses?

Day trading courses abound on the internet. You can find free ones on YouTube, or pay tens of thousands of dollars to join “exclusive” day trading clubs, services, and challenges. There are also many books written on day trading and the many different styles of trading. Though we won’t recommend one over the other, what we do recommend is that you spend as little money as possible to begin with on education. The internet abounds with free resources. We’re even dedicated to helping the cause here at TradingSim with our blog and educational material. That being said, once you’ve scoured the net and read as much as you can, we do recommend trying as many services as you can comfortably afford that cater to your desired style of trading. If it is shorting small-cap stocks and momentum, find a good trading service that teaches you how to do this. Regardless of the style of trading, we recommend that you use discretion to find a trading course that offers an approach to tape reading, volume and price analysis, and trader development. Study some of the great ones, like Richard D. Wyckoff. You won’t go wrong with an understanding of sound technical analysis, which you can apply to any style of trading.

Finding a System for Your Day Trading Business

As part of your educational growth and development, you’ll eventually need to land upon a solid system. For example, if it is the methods of Wyckoff that truly speak to your style of trading, then perhaps you want to establish a trading system solely dependent on springs and upthrusts. You’ll learn more about what makes springs and upthrusts work so well inside trading ranges if you spend the time necessary to develop a trading system based on these strategies. Here is an example of what this might look like on a chart: Spring But this is only one example. We discuss these types of price action trading strategies more in-depth in another article. And if you’re struggling to find a “system” for your trading, be sure to give our post on “ how to find an edge ” a quick read.

Keeping a Routine Schedule - Just Like Normal Employees

If you’re going to be a professional day trader, you need a professional routine. The markets open and run from 9:30am until 4pm EST every single day. You need to be there, obviously.

Routines may stifle creativity or balance if taken to extremes, but your need for routine in the markets will depend largely on your trading system. For example, if your system requires you to be present at the opening bell, then you might need to wake up early, have an exercise routine, do some meditation, then research the morning movers for that day in the pre-market.

This kind of routine will allow you to come to the market prepared. Less preparation = Less profits in the long run. Without plans, your system is really just a series of impulsive and reactionary trading ideas that may or may not work. In essence, don’t be a gambler.

The more routine you become in your trading business, the more disciplined you will become. Likewise, the more disciplined you become, the better chance of success you will have.

Here are some tips we recommend you adopt in your routine:

• Rise early in the morning
• Feed your brain and your belly
• Exercise before the day begins
• Arrive at your desk at routine time each morning
• Give yourself plenty of time to research the day’s trades
• Plan your trades before you take them
• Allow for breaks midway through each day
• Balance your work life with family time
• Leave room for review each day
• Become self-aware as to how healthy your routines is
• Be willing to change certain aspects of your routine

No matter the routine, it is imperative that you treat yourself well and pay attention to your mind and body. Day trading can be a destructive career if you don’t.

Parting Thoughts on How to Start a Trading Business

We hope this has helped you gain a proper understanding of what it takes to run a day trading business. While many different factors can affect the success of a new business, giving yourself the best chance of success from the outset can make a huge difference. Take great care that you don’t embark on this journey lightly. Treat it with utmost respect and diligence, just as you would any other endeavor as an entrepreneur. And if we can help you along the way, please reach out to us. We wish you the best!

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How to Write an Import Export Business Plan + Free Template

As we all know, the demand for foreign goods has increased all over the world more than it’s ever been. And this will offer you a golden opportunity to start your own import-export business!

Whether you’re importing tropical fruits and vegetables, exporting spices and clothes, or even machinery, all you need is passion to drive your business.

Yet, you might have thousands of thoughts or ideas swirling in your mind, including how to manage funding resources for navigating the ins and outs of the global marketplaces.

Surprisingly, the best way to answer all these questions is to write a comprehensive business plan. Here is our import-export business plan template , which will surely help you write your business plan in no time.

Before you start writing your business plan for your new import-export business, let’s go through some basic details.

What is an Import-export business plan?

An import-export business plan is a professional document that outlines the objectives, strategies, operational details, and financial projections of a business engaged in global trade.

It serves as a detailed blueprint, providing a clear picture of market opportunity and helping you navigate the potential challenges of cross-border business.

Why do you need an Import-export business plan?

A well-written business plan is a foundation for planning, managing, and developing an import-export business. It provides a roadmap for your business venture.

An actionable plan helps you summarize your business idea, strategies, goals, and financial projections if you’re seeking to raise funding from investors or banks.

Additionally, a professional business plan helps you comprehend the facts, constraints, and implementation schedules around international efforts.

Now, without further ado; let’s move forward to create a winning business plan:

How to Write an Import-Export Business Plan?

• Executive Summary
• Company Overview
• Industry Analysis
• Competitive Analysis
• Products and Service Offerings
• Marketing Plan
• Management Team
• Operations Plan
• Financial Plan

1. Executive Summary

An executive summary is the first section of the business plan, usually written at the last when the whole plan is ready.

It provides a high-level overview of the import-export business plan. It summarizes the key points, from business concept to financial outlook, for a quick understanding of your business.

The executive summary must be clear, concise, yet engaging as it is an introductory part of the plan and attracts readers to delve further into it.

You may start this section with a brief introduction to the import-export company, including the business name and the type of business you are operating.

After that, highlight the following key components:

• Company’s core objectives
• Mission-vision statements
• Market Opportunity
• Products and services offered
• Leadership team
• Financial statements

Note that potential investors or readers will surely go through this chapter before making a judgment, so make every word count.

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2. Company Overview

The company overview section provides a detailed description of your business. It includes your business concept, ownership structure, history, future goals, and other business-related points.

Since you’ll give a brief business description in the executive summary, this chapter will expand on it, providing an in-depth understanding of your import-export business.

You may start by describing the fundamental details of your company, including name, concept, owners, legal structure, type of business you own, and what you’re importing or exporting.

For instance, you might own one of the several types of import-export companies: export trading company, export management company, or import-export merchant(agent)

Next, provide the start-up summary or background on your business. You may also highlight future business goals and milestones you have achieved.

For example, you may refer to the Walter’s long-term objectives:

Walter’s Long-term Objectives

The three-year goals for Walter Imports are the following:

• Achieve break-even by year 2.
• Retain our long-term contracts with local import shops in Leavenworth, WA, through excellent customer service.
• Become the premier importer of German and Scandinavian specialty products in Leavenworth, and become the prime exporter of apples and other produce for the farmers of the PCC Farmland Fund initiative.

Don’t forget to outline business insurance coverage, necessary licenses, and customs rules and regulations in both import and export countries.

3. Industry Analysis

Industry analysis is a study of your external business environment, providing a complete overview of the industry you serve and its dynamics.

This section helps potential investors and readers understand your market size, growth projections, target customers, and evolving trends. So make sure that you play your cards correctly.

You may conduct thorough market research to identify the feasible market for your imported or exported products. Also, analyze the market conditions, target market demands, and legal considerations.

Try to answer the following questions while conducting a market analysis:

• What is the current market size of the import-export industry?
• Is the market growing or falling in the USA?
• What are the major trends in the global market?
• Who are the top players in the import-export business?
• Which factors affect your business most?
• Who are your target customers you serve and/or expect to serve?
• What are the ideal customers’ buying patterns and needs?

Have a look at Walter’s ideal customer preferences:

In short, this section will educate you about the market and help you develop business strategies according to the market trends.

4. Competitive Analysis

Competitive analysis is crucial to identify key competitors in the international trading market. It will help you determine your unique selling propositions and market positioning.

You may start this section by listing out all your direct and indirect competitors along with their strengths, weaknesses, and market share.

Most likely, your direct competitors or import-export businesses near your location can be more threatening to your company.

So, try to assess their specific products and services, pricing strategy, and type of customers they serve. If possible, ask for feedback directly from their customers and get valuable insights into their preferences.

Doing so will help you demonstrate your competitive advantage and USPs that set your company apart from other businesses.

5. Products and Service Offerings

This section provides a detailed description of the products & services you intend to offer and highlights the scope of your offerings, pricing plans, and more.

Since it’s your opportunity to narrate about the tangible goods or services you will be dealing with, you need to make your offerings exceptional to attract potential investors or partners.

Start writing this section with a detailed breakdown of the products you will be importing or exporting. It could be raw materials, consumer goods, machinery, raw materials, or specialized products.

You may outline the product description along with its pricing, specifications, variants, and any special features.

Here is an example of product offerings written with the help of Upmetrics AI-writing assistant :

If your business encloses service provision in the import-export process, you may specify these services, which could be logistics, quality assurance, custom clearance, or any value-based services.

6. Marketing Plan

The marketing plan provides an in-depth understanding of sales strategies and promotional techniques you will use to acquire new customers and retain existing ones.

This section helps you streamline your marketing efforts and create effective advertising campaigns to reach your target market while keeping track of the estimated budget and maximizing return on investment.

You might consider including the below strategies in your plan:

Brand Image and Positioning

Create a strong brand image and position your imported/exported products strategically. Share the value of your products and emphasize superior quality or eco-friendly practices.

Unique Value Proposition(UVP)

Describe a compelling unique value proposition and define what sets you apart from the competition. Highlight a few elements, such as product quality, ethical practices, sourcing transparency, etc.

Digital Marketing Channels

Establish a professional website, leverage social media platforms, and invest in advertising campaigns to reach the target audience. Showcase your product range or updates and share valuable content related to products or global trade insights. It will enhance your online presence.

Partnerships

Try to build healthy relationships with distributors, retailers, and local businesses. Participate in networking events, trade exhibitions, and online forums.

Customer Retention Strategies

Develop strategies to foster loyalty among customers. Implement loyalty programs, after-sales support, personalized communication, word-of-mouth referrals, or discounts for repeat clients.

7. Management Team

The management team section introduces the business owners and key managers, along with their roles & responsibilities, educational background, work experience, and compensation plan.

A powerful management team helps potential investors or readers to be confident about your import-export business’s idea and vision.

You may start writing with an introduction, highlighting the crucial role of leadership in the ultimate success of your business.

Describe owners and key members of your management staff, including senior management and other employees. Mention their roles and responsibilities, qualifications, and experience.

Also, add an organizational chart that represents the reporting structure and explains how decisions will be made.

You may refer to the below example of an organizational structure crafted using Upmetrics:

Next, outline your compensation plan which includes owners’ and key members’ earnings, bonuses, and benefits.

8. Operations Plan

The operations plan summarizes the day-to-day processes involved in the import-export company. These activities are centered on achieving the business goals and objectives described in the earlier sections.

This section helps you define your team’s responsibilities, daily tasks, and short-term goals you need to accomplish, keeping track of your long-term objectives.

For your import-export business, you may explain logistics, inventory management, distribution & warehousing, customs brokerage, and shipping & freight forwarding.

You may also highlight the quality control measures and the technology you use for order processing or real-time tracking.

Don’t forget to develop a risk mitigation strategy for probable disruptions in the supply chain, including natural disasters, global crises, or political fluctuations.

9. Financial Plan

A financial plan is the most crucial and demanding aspect of business plans.

Financial projections can be a deciding factor when it comes to persuading potential investors or banks to invest or lend money for your import-export business.

This section details all the financial information of your business, such as startup costs, cash flow & revenue streams, projected profits, and strategies to achieve financial goals.

You must include below key components and financial statements while creating a financial plan:

• Income statement
• Balance sheet
• Cash flow projections
• Capital requirements
• Operating costs
• Break-even point
• Business ratios
• Tax considerations

From the above financial forecasts, you can evaluate the funding resources for your import-export business, including bank loans, crowdfunding, investors, or personal savings.

Download Import-Export Business Plan Template

Need help writing your import-export business plan from scratch? Here you go; download our free import-export business plan pdf and get started.

It’s a modern, investment-ready business plan template specifically designed for your import-export business. Use this sample business plan as a guide for writing your own.

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks and automatic financials make it easy.

Start Preparing Your Business Plan with Upmetrics

There’s no doubt—creating business plans that draw investors in can be a very daunting task, but it becomes a lot smoother with the use of Upmetrics!

Whether you’re starting a new business or looking to expand one, Upmetrics offers valuable resources, such as step-by-step guides, 400+ sample business plans , and AI assistance that will serve you perfectly.

Also, our financial forecasting tool will help you create realistic financial forecasts for 3 or more years if you’re not adept with finances.

So, what are you waiting for? Start planning now!

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Proven Steps to Create a Business Plan

Frequently asked questions, what is the initial investment required for starting an import-export business.

For starting an import-export business, initial investments can vary widely based on a few factors, like the scale of business operations, specific product commodities, and target markets. It can range from $5,000(home-based small businesses) to $100,000 or more (large-scale operations).

What are the insurance requirements for an import-export business?

Insurance requirements for importers and exporters include:

• Cargo insurance
• General liability coverage
• International workers compensation
• Trade credit insurance
• Product Liability Insurance

What are the key legal and regulatory considerations in the import-export business?

It’s very crucial to stay informed about the key legal and regulatory considerations of both the exporting and importing countries. So, as per SBA , it involves customs regulations, trade laws, shipment certificates, and necessary business licenses and permits.

Can this template help in identifying potential markets and customers?

Definitely! This well-crafted business plan template can ease your workload and provide a structured roadmap for conducting market research. You may refer to industry analysis and marketing plan sections that help you analyze industry trends, identify potential markets, and understand customer demographics.

How often should I update my import-export business plan?

Remember, your import-export business plan is a living document, which means you may review and update it whenever there are significant changes in a business environment. And it’s advisable to update your plan at least once a year or quarterly.

About the Author

Vinay Kevadiya

Vinay Kevadiya is the founder and CEO of Upmetrics, the #1 business planning software. His ultimate goal with Upmetrics is to revolutionize how entrepreneurs create, manage, and execute their business plans. He enjoys sharing his insights on business planning and other relevant topics through his articles and blog posts. Read more

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Forex Trading Business Plan and Risk Analysis

One of the best things you can do as a forex trader to assure your long term survival in the business is develop a sound and objective forex trading business plan and the discipline to stick to it.

Going through this important process will help you overcome the emotional responses to trading that have been the downfall of so many novice traders.

Once you have developed a good trading plan that you think you can trade in a disciplined way, another good idea is to put all of your trading-related plans and ideas together into an overall trading business plan.

Benefits of a Forex Trading Business Plan

Even if you have been trading for a while, but have not yet written down a forex trading business plan, you can still derive considerable benefits from doing so even now.

Producing a business plan will help you review and solidify your personal trading business activities and goals.

Another major advantage of having a business plan is that if your trading business plan still looks good after its initial testing and trading period, you might even be able to use it to find new investors to put money into your trading business.

Having more funds to trade with can help you access better trading spreads, information, customer service and ultimately, better and more profitable trading opportunities.

Components of a forex Trading Business Plan

Your forex trading business plan does not need to be complex. At a minimum, it should contain your forex trading plan, how you intend to manage any money invested, and a risk assessment of your engagement in the business.

Additional components of a trading business plan might include:

(1)   What the competition is doing.

(2)   Necessary start up and running costs of your trading business.

(3)   The equipment necessary for your business to start operating.

(4)   How you plan on running your trading activities in detail.

(5)   How invested money will be held and managed within your trading business.

(6)   What you plan on achieving with your trading business in terms of profits and meeting other goals.

(7)   An overall risk/reward analysis showing that your trading business makes sense.

Most of the above forex trading business plan items are relatively self-explanatory; however the risk/reward analysis mentioned in item #(7) will be covered in greater detail in the following section.

Assessing the Risks of Your Trading Business

If you honestly believe that your trading business is worth pursuing, then it really cannot hurt to take a closer look at it from a risk/reward perspective. You can do this by assessing as objectively as possible what risks the business might face and what rewards you can reasonably expect to gain from pursuing it.

Furthermore, since some risks might occur with a greater probability than others, they can be weighted in a risk analysis according to their probability of happening. You can then multiply that weight by the potential size of risk involved to get a probability weighted risk exposure.

To get the overall risk/reward profile of your business, you would then sum up all of the risks and compare them to the rewards to see if your business makes sense.

Not only is such a business risk/reward analysis well worth doing, but it makes up an important part of your trading business plan that would ideally be created before you even make your first trade.

Many potential investors will want to see this risk/reward analysis information to help them assess whether your trading business stands a good chance of success for the risk you will be taking.

We also recommend you to read about the basic forex trading plan and why you should have it.

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Create a Winning Forex Trading Business Plan: Key Components and Strategies for Success

Table of Contents

Introduction

A trading business plan is an essential component of successful Forex trading. It serves as a roadmap, guiding traders in making informed decisions, managing risks, and achieving consistent profitability. In this article, we will explore the key components of a Forex trading business plan, offering insights on setting trading goals, developing a strategy, risk management, broker selection, and more. By incorporating these elements into your trading business plan, you will be better prepared to navigate the dynamic world of Forex trading.

Setting Clear Trading Goals

The first step in creating a trading business plan is to establish clear trading goals. These goals should be tailored to your individual financial situation, risk tolerance, and personal preferences. Consider the following when setting your trading goals:

• Short-term, medium-term, and long-term goals : Your goals should cover various timeframes, ranging from daily or weekly targets to longer-term objectives, such as annual returns or overall account growth.
• Profit targets and performance metrics : Establish specific profit targets and performance metrics to measure your progress, such as return on investment (ROI), win rate, or risk-adjusted return.
• Aligning goals with your risk tolerance and personal financial situation : Ensure that your trading goals align with your risk tolerance and financial situation. For example, if you cannot afford significant losses, it is essential to set conservative profit targets and maintain strict risk management protocols.

Developing a Trading Strategy

A solid trading strategy is the foundation of your trading business plan. Here are some key considerations when developing your strategy:

• Fundamental analysis and technical analysis : Fundamental analysis involves analyzing macro-economic and geopolitical factors that affect currency prices, while technical analysis involves using charts and technical indicators to identify trading opportunities. Determine which type of analysis aligns with your trading style and use it as the basis for your strategy.
• Identifying your trading style : There are three primary trading styles: day trading, swing trading, and position trading. Choose the one that best aligns with your personality, time constraints, and financial goals.
• Selecting the best trading strategies and techniques for your style : Each trading style requires different strategies and techniques. For example, day traders may use scalping strategies, while position traders may employ trend following strategies. Research and experiment with different strategies to find the ones that work best for your trading style.
• Adapting your strategy to various market conditions : The Forex market is dynamic and constantly evolving, so it’s essential to adapt your strategy to changing market conditions. Learn to identify different market phases, such as trending or ranging, and adjust your strategy accordingly.

Risk Management

Risk management is a critical component of a trading business plan. Without proper risk management, traders can quickly incur significant losses. Consider the following when managing risk:

• Position sizing and leverage : Determine the appropriate position size and leverage for each trade based on your risk tolerance and account size.
• Stop loss and take profit orders : Always use stop loss and take profit orders to limit your losses and lock in profits.
• Risk-reward ratio : Maintain a favorable risk-reward ratio by ensuring that your potential profit is always greater than your potential loss.
• Managing emotions and maintaining discipline : Trading can be emotionally challenging, so it’s essential to maintain discipline and manage emotions such as fear and greed. Stick to your trading plan, and avoid overtrading or deviating from your strategy.

Choosing the Right Broker

Selecting the right broker is crucial to the success of your trading business plan. Consider the following when choosing a broker:

• Evaluating broker reputation, regulation, and financial security : Choose a broker with a good reputation, strong regulation, and financial security.
• Analyzing trading platforms and tools : Ensure that the broker offers a trading platform and tools that align with your trading strategy.
• Comparing fees, spreads, and commissions : Compare the fees, spreads, and commissions of different brokers to ensure that you are getting the best value for your money.

Creating a Trading Routine

Creating a trading routine is essential for consistent success in Forex trading. Consider the following when creating a trading routine:

• Establishing a daily schedule for market analysis, trade execution, and monitoring : Set aside specific times each day for market analysis, trade execution, and monitoring.
• Maintaining a trading journal : Keep a trading journal to track your progress and identify areas for improvement.
• Regularly reviewing and updating your trading plan : Periodically review and update your trading plan to ensure that it continues to align with your goals and strategies.

Education and Skill Development

Continuous education and skill development are critical to the success of your trading business plan. Consider the following when seeking education and skill development:

• Continual learning through books, courses, webinars, and other resources : Stay up-to-date on Forex trading trends and best practices by engaging in continuous learning through various resources.
• Networking with other traders and participating in trading communities : Join Forex trading communities and engage with other traders to gain insights and feedback.
• Utilizing demo accounts to practice and refine your strategy : Practice and refine your strategy using demo accounts before committing real money to trades.

Performance Evaluation and Plan Adjustments

Periodic performance evaluation and plan adjustments are necessary for continuous improvement in Forex trading. Consider the following when evaluating your performance and making plan adjustments:

• Periodic performance analysis and goal assessment : Regularly analyze your performance and compare it to your trading goals and metrics.
• Identifying areas for improvement and implementing changes : Use performance analysis to identify areas for improvement and implement changes to your trading strategy and plan.

By incorporating these elements into your trading business plan, you can create a comprehensive and effective roadmap for successful Forex trading.

Creating a trading business plan is essential for successful Forex trading . By setting clear trading goals, developing a solid trading strategy, managing risk, choosing the right broker, creating a trading routine, seeking education and skill development, and regularly evaluating performance and making adjustments, traders can navigate the dynamic world of Forex trading with confidence and consistency. Remember, a trading business plan is not a one-time task, but rather an ongoing process of learning, adapting, and refining your approach to achieve your trading goals.

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Why should traders develop a plan, how to determine risk tolerance when trading, how to analyze trading performance, what benchmarks can be used for trading, what are the best timeframes to use for trading, the bottom line.

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• Trading Basic Education

10 Steps to Building a Winning Trading Plan

There is an old expression in business that, if you fail to plan, you plan to fail. It may sound glib, but people that are serious about being successful, including traders, should follow those steps as if they are written in stone. Ask any trader who makes money on a consistent basis and they will probably tell you that you have two choices: 1) methodically follow a written plan or 2) fail.

If you already have a written trading or investment plan, congratulations, you are in the minority. It takes time, effort, and research to develop an approach or methodology that works in financial markets. While there are never any guarantees of success, you have eliminated one major roadblock by creating a detailed trading plan .

Key Takeaways

• Having a plan is essential for achieving trading success.
• A trading plan should be written in "stone", but is subject to reevaluation and can be adjusted along with changing market conditions.
• A solid trading plan considers the trader's personal style and goals.
• Knowing when to exit a trade is just as important as knowing when to enter the position.
• Stop-loss prices and profit targets should be added to the trading plan to identify specific exit points for each trade.

If your plan uses flawed techniques or lacks preparation, your success won't come immediately, but at least you are in a position to study and modify your course. By documenting the process, you learn what works and how to avoid the costly mistakes that newbie traders sometimes face. Whether or not you have a plan now, here are some ideas to help with the process.

Trading is a business, so you have to treat it as such if you want to succeed. Reading a few books, visiting webinars, buying a charting program, opening a brokerage account , and starting to trade with real money is not a business plan —it can be a recipe for disaster.

A plan should be written—with clear signals that are not subject to change—while you are trading, but subject to reevaluation when the markets are closed . The plan can change with market conditions and might see adjustments as the trader's skill level improves. Each trader should write their own plan, taking into account personal trading styles and goals. Using someone else's plan does not reflect your trading characteristics.

No two trading plans are the same because no two traders are exactly alike. Each approach will reflect important factors like trading style as well as risk tolerance . What are the other essential components of a solid trading plan ? Here are 10 that every plan should include:

Firstly, if you are new to trading, you should determine financial objectives, risk tolerance , and time horizon. These items need to be clearly articulated to ensure that your trading activities can be achieved.

A trading style needs to be identified. This style should reflect your personality, culture and preferences. The plan can include day trading , swing trading , position trading or long-term investing . The chosen style should align with one's goals and time availability.

A detailed strategy needs to be created. This strategy outlines an approach to the markets. Also a criteria for trade selection needs to be defined. This can include technical indicators , fundamental analysis or a combination of both. Finally when building the strategy, entry and exit tactics, risk management techniques, and position sizing rules need to be specified.

Trading is not a guaranteed path to wealth and involves inherent risks. Realistic expectations for returns need to be set and the potential for losses needs to be recognized. You should avoid the trap of chasing quick profits or risking too much capital on a single position or trade.

You need to conduct thorough market analysis to identify potential trade opportunities. If they are part of your plan, analyze charts, market trends should be studied, news and economic indicators have to be monitored. Take a step back and consider the overall market condition.

In order to protect capital, risk management strategies should be implemented. Allocate a percentage of your portfolio for each trade and don't go above the amount you have determined is right for your account. This amount should be equivalent to the amount that you are willing to lose per trade. Make use of stop loss-orders to limit potential losses and establish clear take profit targets to secure gains.

Determine how you will manage open positions . You should determine when to adjust stop-loss orders, take partial profits (possibly through the use of trailing stops ), or exit the trade entirely.

Once you have written your trading plan down, stick with it, Avoid situations where you abandon your trading plan impulsively because the market is doing something that elicits an emotional response from you like fear or greed. Train yourself to embrace discipline and consistency when executing and exiting trades.

9. Monitoring and Trade Evaluation

A detailed record of trading activity, including entry and exit points, reasons for taking the trade, and the outcomes are essential. A frequent review and evaluation of trades is necessary to becoming a good trader. The evaluation and review of your past trades will allow you to identify patterns, strengths, and areas for improvement.

The percentage of day traders that quit within two years, according to a 2017 paper titled "Do Day Traders Rationally Learn About Their Abilities" by Barber, Lee, Liu, Odean, and Zhang.

Stay updated on market trends, economic news, and new trading techniques. Read books, attend seminars and webinars, follow reputable financial news sources, and interact with experienced traders to enhance your knowledge and skills.

Traders should develop a plan in order to maintain a disciplined and systematic approach to their trades. Also, a well-defined trading plan helps remove subjectivity from trading decisions.

A trading plan incorporates risk management strategies such as setting stop-loss orders and determining position sizes based on risk tolerance. Without a plan, traders may expose themselves to excessive risk or fail to implement appropriate risk management measures.

Some key factors when traders assess risk tolerance are the financial situation of the trader, the investment goals, risk appetite as well as experience and knowledge of the financial markets. A risk tolerance questionnaire or even a meeting with a financial advisor will help determine your risk tolerance.

There are a number of ways to analyze trading performance. A few common methods include calculating the total return of the trades, determining the profit factor as well as using the Sharpe ratio . Other metrics include analyzing the win rate, the average win amount, the average loss amount, the drawdowns and the recovery rate. In this case, the recovery rate is the percentage of the drawdowns that the trades recovered.

Benchmarks serve as reference points or as performance indicators to assess the success and effectiveness of one's trading strategy. Some common benchmarks include: market indices , professional fund managers, mutual funds or even absolute return targets.

The best trading timeframe is dependent on the trader's style, personal preferences, time availability and the specific market or instrument. There are different time frames for different styles of trading, for instance the following all have very different time frames: position trading , swing trading , day trading and scalping .

Successful practice trading does not guarantee that you will find success when you begin trading real money. That's is because trading real money is when emotions come into play. But successful practice trading does give the trader confidence in the system they are using, if the system is generating positive results in a practice environment. Deciding on a system is less important than gaining enough skill to make trades without second-guessing or doubting the decision. Confidence is key.

There is no way to guarantee a trade will make money. The trader's chances are based on their skill and system of winning and losing. There is no such thing as winning without losing. Professional traders know before they enter a trade that the odds are in their favor or they wouldn't be there. By letting their profits ride and cutting losses short, a trader may lose some battles, but they will win the war. Most traders and investors do the opposite, which is why they don't consistently make money.

Traders who win consistently treat trading as a business. While there is no guarantee that you will make money, having a plan is crucial if you want to be consistently successful and survive in the trading game.

Barber et. al. " Do Day Traders Rationally Learn About Their Ability? ," Page 1.

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Trading Plan Template for 2024 [Free PDF | Sheets Download]

• 7 mins read ●
• Published: 11 May 2022
• Last Updated: 1 April 2024

Needless to say, having a plan before you start trading is essential to your success as a trader. Every experienced trader will tell you that when you enter the markets, you risk your money and, more importantly, your ego and confidence in yourself.

• A well-thought-out trading plan is crucial for forex trading success, safeguarding both finances and self-confidence.
• While many traders are naturally skilled, creating a clear trading plan can still be challenging.
• Using a trading plan template can streamline your strategy and increase chances of consistent profits.

This article will help you with everything you need to know about developing a trading plan . We’ll also include a trading plan PDF, a trading plan Excel template , and a Word document that you can download and use in your trading journey.

• What is a Trading Plan Template

Trading Plan Template FREE Downloads

• How to Build Your Own Trading Plan Template?

1. Set Your Goals – Financially and Emotionally

2. get familiar with trading jargon and analysis methods, 3. develop a trading strategy, 4. set a risk reward ratio, 5. always learn and grow, 6. make an organized trading track record.

• BOONUS: Trading Plan Infographic

What is a Trading Plan Template?

As the name implies, a trading plan is a set of rules and guidelines that a trader follows to execute a trade. Besides that, a trading plan might include suggestions for a healthy trading daily routine and tasks, hence a trading checklist , that will help you manage your account and control your emotions.

For example, with a trading plan, you can define your:

• trading goals
• strengths and weaknesses
• risk management strategy
• trading strategy
• entry rules
• daily routine
• and much more

“Plan your trade and then trade your plan.”

In this section, we have created trading plan templates that you can use for free in the format of your preference. 

• Trading Plan Template PDF
• Trading Plan Template Google Sheets
• Trading Plan Template Word

How to Build Your Trading Plan Template in 6 Easy Steps

So, now that you understand what a forex trading plan is, you need to create a specific plan that matches your style and personality. Personally, while working as a trader in a proprietary trading firm , I remember every trader had a different method, routine, tasks, and rules.

For example, some traders like adding sticky notes on their desktops while others prefer a clean table. Some traders enter hundreds of trades in one trading day while others enter one or two trades in a day. So, it’s up to you to define your own plan and trading strategies .

Nonetheless, based on my knowledge and experience, there are some must-have steps you need to consider to develop a successful trading plan .

You can download our trading plan template below and check the steps on how to develop your trading plan later in this article.

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First and foremost, you must define your goals. In other words, you will need to know what you plan to achieve from your trading experience.

To help yourself, ask these questions :

• Is it an additional income only? Your main income?
• Do you plan to get rich from trading?
• What is the trading capital you are willing to risk and what is your profit target?
• How many hours a day do you plan to spend on trading?

In that aspect, you’d be surprised to know that many people who become professional successful traders do not necessarily do it to make money.

Instead, some traders do it for fun, a hobby, or a competitive game. So consider these factors as well. If this is the case for you, then you need to know it before you start trading. Maybe it can give you an advantage over other participants in the forex market .

Before you make your first trade in the forex market, you first must understand the trading jargon and the different analysis methods.

If needed, take a quick trading course to learn how the forex or the stock market works, read articles, books, financial sites, etc. Additionally, you better explore the two methods to analyze financial assets – technical analysis and fundamental analysis . 

Then, find the best way for you to analyze the markets and read Forex charts. It’s up to you to decide whether you want to use line, bar, or candlestick charts and, more importantly, what technical indicators you want to use.

Additionally, you can learn how to read popular chart patterns and use them to find trading opportunities. Once again, you have to try before you know it.

No one is born a great Trader, one gets great by learning

There are no two traders that are precisely the same. Therefore, you must find your trading strategy and trading style. This is a result of trial and error. It might take weeks or months until you get to the point where you have established a successful trading strategy, and there’s no way to escape this step.

When you make your first step in the trading world, you’ll get familiar with the different trading strategies – position trading, swing trading, day trading, and scalping trading. Moreover, you can try different strategies such as the naked trading strategy or the 5-3-1 forex trading strategy .

Keep in mind that there are many trading strategies to choose from, but you’ll have to find your unique trading style and strategy within time. For that matter, you need to use a trading plan at the beginning of your journey to find the right strategy that matches your personality.

Trading risk management is a predefined strategy to minimize losses and maximize profits. There are lots of tools and risk management rules a trader can use to protect themselves from losses and effectively manage their trading account.

Having said that, there’s one tool used by many traders, which is the most basic and the most effective of all – That is the risk-reward ratio .

In simple terms, a risk-reward ratio is a method to calculate the potential profit of a trade/day/week/month to a potential loss. In other words, it is a method to define your trade risk, that is how much risk you are willing in a trader, or in a day (the method is particularly for day trading).

For example, if you decide to use a risk-reward of 2:1, you are essentially willing to risk $1 for each trade to earn $2.

Trading is not like most professions. The markets always change, the technology evolves, and even the dynamic of the markets is constantly changing. Trust me, financial markets are not the same as they used to be fifteen years ago, and most likely, they will change again in the future.

I mean, the cryptocurrency market is one good example of the unpredictable nature of the trading world and financial markets.

This way or the other, you must read trading books and articles, watch trading movies , and listen to trading podcasts – everything you can do to increase your knowledge. Yes, knowledge is power, but in trading, knowledge is essential.

“An investment in knowledge always pays the best interest.” Ben Franklin

In the final step, make sure you analyze your trading past performance and keep track of your winning and losing trades. Yes, it’s an annoying task, especially when you have a losing day.

Writing down your losing trades is a punch to your ego, but it will help you improve your performance and trading decisions in the future. By doing so, you can learn your worst-performing days of the week, hours, financial instruments, etc. 

Luckily, in most retail investor accounts, you can enter your trading platform and extract your daily/weekly/monthly performance. So, in the words of Forrest Gump: “One less thing to worry about”.

BONUS: Trading Plan Action Plan Infographic

Here is an infographic with 6 action steps for your trading plan.

You can also check our blog post about using a trading journal template [free Google Sheets and Excel spreadsheets included]

Over to You

In a nutshell, every trader must have a well-defined solid trading plan . Developing an organized trading system is the first step in becoming a professional and successful forex trader and will increase your chances of success over the short and long term.

For now, you can use our free Forex trading plan template to start with. Then, add notes, tasks, or any other inspirational quotes you think will help you to trade better.

Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.

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Disclaimer: The information on the HowToTrade.com website and inside our Trading Academy platform is intended for educational purposes and is not to be construed as investment advice. Trading the financial markets carries a high level of risk and may not be suitable for all investors. Before trading, you should carefully consider your investment objectives, experience, and risk appetite. Only trade with money you are prepared to lose. Like any investment, there is a possibility that you could sustain losses of some or all of your investment whilst trading. You should seek independent advice before trading if you have any doubts. Past performance in the markets is not a reliable indicator of future performance.

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Trading Business Plan Template

Written by Dave Lavinsky

Trading Business Plan

Over the past 20+ past, person have helped over 500 entrepreneurs and business owners establish business plans to begin also grow his trading companies.

If you’re unfamiliar with creating an trading company plan, you may think creating one will be a time-consuming and irritating process. For most entrepreneurs it a, but used you, it won’t be since we’re here to help. We have the experience, tools, and knowledge to help him create adenine great plan.

In this article, you will learn some background information on why business planning is essential. Following, thee desire know how to want one dealing business map step-by-step consequently him can make your plan today.

Download our Ultimative Business Plan Template here >

What Is a Economy Plan?

A business plan provides a instant from your trading company because it stands today, and lays output your growth set for aforementioned next fifth years. I explains your business goals and their strategies for reaching them. A also includes market research to support your plots.   Learn about general merchandise. Understand what general merchandise is, lessons the features of basic merchandise stores, plus see their...

Why Your Need a Business Plan

If you’re looking to getting a trading company or grow your existence company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your retail business to improve your odds of success. Your work plan is a living document that should be updated annually as your company grows and changes.   Starting a General Merchandise Wholesale Corporate

Sources of Funding for Trading Company

With regards to funding, the main sources concerning funding for a trading business are personal savings, credit cards, bank loans, and angel investing. When it comes to bank loans, bank will want to review our plan and receive confidence that you will be able to pay your borrow or interest. To acquire which confidence, and loan officer will not only want to ensure that your financials are reasonable, but they will also do to see a professional flat. Suchlike a plan will make them the confidence that you canister successfully and professionally operate a business. Personal savings and banker bank are the many common funding paths for trading enterprise.  

    Finish Your Company Plan Today!

How to compose an business plan for a trading company.

If you want go start one trading business or expand your current one, you need a business plan. The guide below details the necessary get for how to write each fundamental component of your trading business plan. Retail Store Store Plan [Sample Template for 2023]

Board Executive

Choose executive summary provides certain introduction to your trading business plan, but it is normally the last section you write because it provides a summery is each key section of your plan.

The goal out yours executive summary is on quickly engage the reader. Explain in them the kind of trading company you are running and the status. For example, are you a startup, do they have a distribution business that you would please to grow, or exist you operating an chaining of trading companies? Dollar Store Business Schedule - Executive summary, Company ...

Move, provide an overview of each the the subsequent sections of your plan.

• Give a brief site of the sales business.
• Discuss the choose of trader trade her are operative.
• Detail own direct your. Give certain overview of your targeted my.
• Provide a snapshot of your marketing strategy. Recognize the key members to your team.
• Quote an overview is your financial plan.

Corporation Overview

Includes your company summary, you will detail what gender of trading business thee exist operating.

For example, thou might specialist in one of who following types of trading businesses:

• Retail trading business: On type of business sells merchandise directly to consumers.
• Wholesale trading business: Save type regarding business sells product to other corporate.
• General merchandise trading business: This type of business sells a large variety of products.
• Specialized trader business: This type regarding business promote an specific type of product.

Are auxiliary to explaining and type of trading business you will operate, the our overview demands to provide background on of store.

Incorporate answers up questions such for:

• Wenn and why did you start the business?
• What milestones have you achieved to date? Milestones could include the numeral of customers serves, aforementioned number away products sold, and attaining $X amount inches turnover, ect. Convenience Store Business Plan - Bplans
• Your legal corporate Are you incorporated as an S-Corp? An LLC? A one proprietorship? Explain your legal structure here.

Industry Investigation

In your industrial or market analysis, you demand to provision an overview of the trading industry.

While this might seem needless, it serves repeated usage.

First, researching an distribution industry teach she. Computer helps you understand of market is the you are operating.

Secondary, market research can improve your product strategy, particularly provided your evaluation identifies markte industry.

The third reason is at prove to primers the it are an expert in yours industry. To conducting the research and presenting it in your plan, you leisten just that.

The following questions should to answered in the industry analysis section:

• How big is the trading industry (in dollars)?
• Is who market declining or increasing?
• With are which key competitors inches the market?
• Those been who key vendors in to market?
• What trends exist affecting the industry?
• Get is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market sizes? Which is, how big is the potential aimed market required your trading business? You can extrapolate such a figure by assessing the size of to market in the voll state and then application that figure to your local population.

Buyer Analysis

The customer analysis section require detail the customers you serve and/or expect to serve.

The following are examples starting our segments: individuals, schools, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a cool impact on the type concerning trading business you actual. Clearly, individuals would respond to different promotion promotions about corporations, for example.

Try to break out your target customers int terminology of their demographic and psychographic profiles. With wishes to demographics, including a discussion the the ages, genders, locations, real income levels of the potential customers them seek until serve. Do thou want to start a retail store and need up write a business plan? If YES, here is a sample retail storing business plan template & feasibility review

Psychographic profiles explain the wants and needs of your target clientele. The more you can recognize and define these needs, to better you will do in attracting and retaining your customers.   Commercial Business Flat Template & How-To Guide [Updated 2023]

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With Growthink’s Ultimate Businesses Plan Template you can finish your plan by valid 8 hours or less!

Competitor Analysis

Our competitive analysis should identifying the indirection and direct contestant insert business encounter and then focus on one letzter.

Direct competitors are other dealing businesses.

Direct competitors are other options that customers have to purchase from that aren’t directly competing with your product or technical. This includes other types of retailers or wholesalers, re-sellers, plus dropshippers. Your need to mention such competition as well. This Retail Store Commercial Plan can serve as a starting point in yours new business, instead the you grow the existing your. Retail Storage Store Flat template.

Used every such competitor, provide an tour of their business and document their strengths or weaknesses. If you once worked in own competitors’ organizations, it will are impossible to see everything about them. But you should be able to meet out key things about them suchlike more How General Retail Deals Can Improve Category Benefit

• What types out client do they serve?
• Whats type of trading business are they?
• What shall hers pricing (premium, low, etc.)?
• What are they good at?
• What are his weaknesses?

With regards to the continue two a, think info thine answers from an customers’ perspective. And don’t will afraid until ask your competitors’ customers what she like most and least about them.

The final part for respective competitive analysis section the to document your areas of competitive benefit. For example:

• Will you make it easier for customers to acq my effect or service?
• Will you offer products or services that thy competition doesn’t?
• Will you provide better clients service?
• Will you offer better pricing?

Reflect about ways you will outperform your competition and document them in this section of your plan.  

Marketing Floor

Traditionally, an marketing plan involves the four P’s: Product, Price, Put, and Sales. For a sales companies, your marketing strategy shouldn include the following:

Sell : In who product section, she should reiterate the type out trading company that you documentations in your company company. Then, detail the specific products or services your will be offering. For exemplary, will you sell ornaments, wear, button household goods?

Prix : Document the prices you will offer the how they compare for thy competitors. Essentially in the product furthermore price sub-sections of your set, you are presenting this my and/or services you offer and their awards.

Place : Place refers to the site of your trading company. Document where your company is situated press mention how the site will impact your track. For instance, is your trading business located in one busy retail district, a business district, a standalone facility, press purely online? Discuss how your site might be the ideal location for your customers.

Promotions : The final portion of your trading marketing plan is where you will document how i will drive capacity patrons to your location(s). To following are multiple promotional methods she might consider:

• Publicize in site papers, radio stations and/or magazines
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Publicity on social media platforms
• Improve the SEO (search engine optimization) up the website for targeted keywords

Operations Plan

While the earlier sections of your plan explained your objective, your company plan describes how you will meet them. Your operations planner ought have two pronounced sections as follows.

Everyday short-term operation include all of of tasks involved for race your trading business, including answering summons, scheduling shipments, ordering inventory, and collecting payments, eat.

Long-term goals are the milestones thee hof into achieve. These could included the dates when you expect into acquire your Xth customer, or if you hope to reach $X in total. It ability also be when yourself expect to expand your trading business-related to a newer city.  

Management Team

To demonstrate thy trading business’ potential to succeed, a strong management team is essential. Highlight your key players’ themes, stress those skills and experiences that provide their ability to grow a group.

Ideally, you and/or your team membersation have kurz experience in administrating trading businesses. For so, mark this experience and specialty. But also highlight any experience the him think will help your business succeed. Starting a widespread commercial large business is einen excellent entrepreneurial opportunity but it's crucial to plan out of business in detail before she initiate. This newsletter contains ampere friendly, comprehensive guide on and essential elements for business triumph.

Is your your is lacking, consider assembling an advisory food. Any advisory board would include 2 to 8 individuals who would act as mentors on your business. They would help response questions and provide strategic guides. If needed, look for advisory board members with experience in managing an trading business.  

Financial Plan

Your financial plan should include to 5-year financial statement broken out both monthly or per fork the first year and will annually. Your treasury instructions include to income statement, balance sheet, and cash flow statements.   Download our retailers business plan template & step-by-step useful to quickly & easily created your retail business plan to grow is business and/or raise funding.

Income Statement

An income statement is better commonly called a Profit and Loss statement or P&L. It shows your net and then reduces your daily to show whether you turned adenine profit or not. In this blog article, we unpack the steps general trade stores should need to take to improve the performance of their my in-store.

In developing your income statement, you requirement to devise assumptions. Since instance, will they charge per item press per pound and will she offer discounts for bulk orders? And will sales grow by 2% or 10% per price? As you can imagine, your choice from assumptions will greatly impacting the fiscal prophecies forward your business. Than much as possible, guide research to seek at root owner suppositions in reality.   Dollar Daze is a general specializing at general merchandise. One store has access to the purchasing power of how centers offering merchandise at prices ...

Rest Sheets

Balance sheets showing your assets and liabilities. While balance leaf can include very information, trial go simplify her to the key items you need to know around. For instance, if her spend $50,000 on building out your trading general, this will not give you right profits. Rather it shall the asset that will hoping help you creates profits for past to come. Likewise, if a lender writes you an check by $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.   Get Growthink's trading company plan presentation & step-by-step instructions to quickly & well create your trading business plan today.

Cash Flow Statement

Insert cash flow statement will help determine as much money she require to start or grow your business, and ensure you never run out from money. What most enterprise and traders don’t realize is that you can turn a profit but run out on money and leave bankrupt. [This sample business plan is based on one from several years ago, valid will, ... real occurred forward with a delay rebound in the generals economy.

When creating choose Income Statement and Balance Sheets be definite to include several from the key costs needed in starting oder growing a trading business:

• Cost of equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Fix your full financial projections is the appendix of your plan together with any supporting documents that make your plan extra compelling. For example, you might include your site location lease with a list of your suppliers.   Retail Store Business Plan

Handwriting ampere business plan for your trading business is a worthwhile endeavor. If you follow the template higher, by the time you were done, you becoming truly remain an expert. You will understand the trade industry, your race, and your clientele. You will develop one marketing strategy also bequeath understand how it takes into launch and grow a successful trading business.   Retail Business Plan Screen & Guide [Updated 2023]

Dealing Business Plan Template FAQs

What is the easiest way to complete my trading business plan.

Growthink's Ultimate Business Planner Template allows you to quickly both easily write your trading business create.

How Do You Start a Trading Store?

Starting a trading business is easy with these 14 steps:

• Choose the Name for Your Trading Economy
• Create Our Trading Business Draft (use a trader business plan template or one forex commercial plan template)
• Choose that Legal Structure on Get Trader Business
• Secure Startup Funding for Trading Business (If Needed)
• Secure a Your for Your Business
• Register Your Trading Business is the EXCHEQUER
• Open one Business Store Account
• Get a Business Credit Maps
• Get the Required Business Licences and Allowances
• Acquire Business Insurance since Their Trading Business
• Buy or Lease the Right Trading Business Fitting
• Develop Your Trading Business Marketing Materials
• Purchase and Setup this Software Needed toward Run Your Commercial Business
• Open for Business

What is a Trading Store?

There am several types of trading businesses:

• Retail trading business- sells merchandise directly to users
• Wholesale trading business- sells merchandise to other businesses
• General merchandise trade business- sells a widespread variety of merchandise
• Specialized trading business- sells one specifics type of product

Finish Your Trading Economy Plan in 1 Day!

Don’t you wish there were a faster, easier way to finish your plan?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 clock with less!

OR, Renting Us Grow Your Plan For You

Since 1999, Growthink has advanced business plans for thousands of business anybody have gone the to achieve tremendous success.

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Other Helpful Business Plan Articles & Templates

550+ Business Plan Examples to Launch Your Business

Need help writing your business plan? Explore over 550 industry-specific business plan examples for inspiration.

Find your business plan example

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Example business plan format

Before you start exploring our library of business plan examples, it's worth taking the time to understand the traditional business plan format . You'll find that the plans in this library and most investor-approved business plans will include the following sections:

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. You should also plan to write this section last after you've written your full business plan.

Your executive summary should include a summary of the problem you are solving, a description of your product or service, an overview of your target market, a brief description of your team, a summary of your financials, and your funding requirements (if you are raising money).

Products & services

The products & services chapter of your business plan is where the real meat of your plan lives. It includes information about the problem that you're solving, your solution, and any traction that proves that it truly meets the need you identified.

This is your chance to explain why you're in business and that people care about what you offer. It needs to go beyond a simple product or service description and get to the heart of why your business works and benefits your customers.

Market analysis

Conducting a market analysis ensures that you fully understand the market that you're entering and who you'll be selling to. This section is where you will showcase all of the information about your potential customers. You'll cover your target market as well as information about the growth of your market and your industry. Focus on outlining why the market you're entering is viable and creating a realistic persona for your ideal customer base.

Competition

Part of defining your opportunity is determining what your competitive advantage may be. To do this effectively you need to get to know your competitors just as well as your target customers. Every business will have competition, if you don't then you're either in a very young industry or there's a good reason no one is pursuing this specific venture.

To succeed, you want to be sure you know who your competitors are, how they operate, necessary financial benchmarks, and how you're business will be positioned. Start by identifying who your competitors are or will be during your market research. Then leverage competitive analysis tools like the competitive matrix and positioning map to solidify where your business stands in relation to the competition.

Marketing & sales

The marketing and sales plan section of your business plan details how you plan to reach your target market segments. You'll address how you plan on selling to those target markets, what your pricing plan is, and what types of activities and partnerships you need to make your business a success.

The operations section covers the day-to-day workflows for your business to deliver your product or service. What's included here fully depends on the type of business. Typically you can expect to add details on your business location, sourcing and fulfillment, use of technology, and any partnerships or agreements that are in place.

Milestones & metrics

The milestones section is where you lay out strategic milestones to reach your business goals.

A good milestone clearly lays out the parameters of the task at hand and sets expectations for its execution. You'll want to include a description of the task, a proposed due date, who is responsible, and eventually a budget that's attached. You don't need extensive project planning in this section, just key milestones that you want to hit and when you plan to hit them.

You should also discuss key metrics, which are the numbers you will track to determine your success. Some common data points worth tracking include conversion rates, customer acquisition costs, profit, etc.

Company & team

Use this section to describe your current team and who you need to hire. If you intend to pursue funding, you'll need to highlight the relevant experience of your team members. Basically, this is where you prove that this is the right team to successfully start and grow the business. You will also need to provide a quick overview of your legal structure and history if you're already up and running.

Financial projections

Your financial plan should include a sales and revenue forecast, profit and loss statement, cash flow statement, and a balance sheet. You may not have established financials of any kind at this stage. Not to worry, rather than getting all of the details ironed out, focus on making projections and strategic forecasts for your business. You can always update your financial statements as you begin operations and start bringing in actual accounting data.

Now, if you intend to pitch to investors or submit a loan application, you'll also need a "use of funds" report in this section. This outlines how you intend to leverage any funding for your business and how much you're looking to acquire. Like the rest of your financials, this can always be updated later on.

The appendix isn't a required element of your business plan. However, it is a useful place to add any charts, tables, definitions, legal notes, or other critical information that supports your plan. These are often lengthier or out-of-place information that simply didn't work naturally into the structure of your plan. You'll notice that in these business plan examples, the appendix mainly includes extended financial statements.

Types of business plans explained

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. To get the most out of your plan, it's best to find a format that suits your needs. Here are a few common business plan types worth considering.

Traditional business plan

The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you'll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or in any other situation where the full details of your business must be understood by another individual.

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

The structure ditches a linear format in favor of a cell-based template. It encourages you to build connections between every element of your business. It's faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan . This format is a simplified version of the traditional plan that focuses on the core aspects of your business.

By starting with a one-page plan , you give yourself a minimal document to build from. You'll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan.

Growth planning

Growth planning is more than a specific type of business plan. It's a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, forecast, review, and refine based on your performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27 minutes . However, it's even easier to convert into a more detailed plan thanks to how heavily it's tied to your financials. The overall goal of growth planning isn't to just produce documents that you use once and shelve. Instead, the growth planning process helps you build a healthier company that thrives in times of growth and remain stable through times of crisis.

It's faster, keeps your plan concise, and ensures that your plan is always up-to-date.

Download a free sample business plan template

Ready to start writing your own plan but aren't sure where to start? Download our free business plan template that's been updated for 2024.

This simple, modern, investor-approved business plan template is designed to make planning easy. It's a proven format that has helped over 1 million businesses write business plans for bank loans, funding pitches, business expansion, and even business sales. It includes additional instructions for how to write each section and is formatted to be SBA-lender approved. All you need to do is fill in the blanks.

How to use an example business plan to help you write your own

How do you know what elements need to be included in your business plan, especially if you've never written one before? Looking at examples can help you visualize what a full, traditional plan looks like, so you know what you're aiming for before you get started. Here's how to get the most out of a sample business plan.

Choose a business plan example from a similar type of company

You don't need to find an example business plan that's an exact fit for your business. Your business location, target market, and even your particular product or service may not match up exactly with the plans in our gallery. But, you don't need an exact match for it to be helpful. Instead, look for a plan that's related to the type of business you're starting.

For example, if you want to start a vegetarian restaurant, a plan for a steakhouse can be a great match. While the specifics of your actual startup will differ, the elements you'd want to include in your restaurant's business plan are likely to be very similar.

Use a business plan example as a guide

Every startup and small business is unique, so you'll want to avoid copying an example business plan word for word. It just won't be as helpful, since each business is unique. You want your plan to be a useful tool for starting a business —and getting funding if you need it.

One of the key benefits of writing a business plan is simply going through the process. When you sit down to write, you'll naturally think through important pieces, like your startup costs, your target market , and any market analysis or research you'll need to do to be successful.

You'll also look at where you stand among your competition (and everyone has competition), and lay out your goals and the milestones you'll need to meet. Looking at an example business plan's financials section can be helpful because you can see what should be included, but take them with a grain of salt. Don't assume that financial projections for a sample company will fit your own small business.

If you're looking for more resources to help you get started, our business planning guide is a good place to start. You can also download our free business plan template .

Think of business planning as a process, instead of a document

Think about business planning as something you do often , rather than a document you create once and never look at again. If you take the time to write a plan that really fits your own company, it will be a better, more useful tool to grow your business. It should also make it easier to share your vision and strategy so everyone on your team is on the same page.

Adjust your plan regularly to use it as a business management tool

Keep in mind that businesses that use their plan as a management tool to help run their business grow 30 percent faster than those businesses that don't. For that to be true for your company, you'll think of a part of your business planning process as tracking your actual results against your financial forecast on a regular basis.

If things are going well, your plan will help you think about how you can re-invest in your business. If you find that you're not meeting goals, you might need to adjust your budgets or your sales forecast. Either way, tracking your progress compared to your plan can help you adjust quickly when you identify challenges and opportunities—it's one of the most powerful things you can do to grow your business.

Prepare to pitch your business

If you're planning to pitch your business to investors or seek out any funding, you'll need a pitch deck to accompany your business plan. A pitch deck is designed to inform people about your business. You want your pitch deck to be short and easy to follow, so it's best to keep your presentation under 20 slides.

Your pitch deck and pitch presentation are likely some of the first things that an investor will see to learn more about your company. So, you need to be informative and pique their interest. Luckily, just like you can leverage an example business plan template to write your plan, we also have a gallery of over 50 pitch decks for you to reference.

With this gallery, you have the option to view specific industry pitches or get inspired by real-world pitch deck examples.

Ready to get started?

Now that you know how to use an example business plan to help you write a plan for your business, it's time to find the right one.

Use the search bar below to get started and find the right match for your business idea.

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The Ultimate Trading Plan Template

A proper Trading Plan is essential to your success as a trader.

Anyone thinking of starting a business wouldn’t begin without a plan, if they do, they probably won’t like the end results. Day trading is no different than any other business.

As they say, “If you fail to plan, then you’ve already planned to fail.”

You’re about to learn the same process I’ve used for the past 20 years. It’s also what I currently teach our students.

After completing this post, you should be confident in your ability to write a rock solid trading plan. To speed up the process, I provided a link to our Trading Plan template at the end.

Let’s get into it…

What is a Trading Plan?

A Trading Plan defines a trader’s goals, expectations, routines, risk management, and trading strategies. A successful plan will include the logic underlying the strategies and processes a trader deploys.

Elite traders already know they have won the game before placing a single trade for two reasons.

First, they have a well defined edge that’s repeatable. 

The primary goal of your trade plan is to precisely define your processes and strategies, with the end of goal of creating a repeatable process.

Second, elite traders fully understand there is a random distribution between wins and losses for any given set of variables that define an edge , resulting in flawless execution.

First, you need to focus on developing your process. You will work on developing the mindset of winning trader and the ability to think in probabilities (versus P&L) when you begin backtesting and simulated trading.

A simple google search and you will find endless styles and formats for trade plans.

For me, my plan acts as the CEO of my business. defining the big picture items such as rules, processes, routines, analytics, theories and goals.

A lot of traders include their trading strategies in their trade plan, but I prefer defining them in a separate Playbook. I do this for several reasons…

First, I’ve been trading for over two decades, in that time I’ve developed and traded a lot of different strategies.

I’ve always found it beneficial to have all my strategies broken down individually. This becomes extremely valuable as you get more into strategy development.

A lot of the strategies I’ve built were a result of combining the different tools, theories and processes from other strategies I’d previously traded in my career.

Second, I think a Trade Plan that focuses solely on the macro level picture will help you in your review.

When I began my career I was surrounded by elite traders every day. My mentor and the owner’s of the firm kept me in line and made sure I was following their processes. If I was trading poorly, they held me accountable.

Accountability Partner

If you haven’t already chosen someone as an accountability partner, it should be the first thing you do after reading this post.

Your trade plan will be shared with your Accountability Partner in order to review your progress.

Your playbook will be used in strategy development and shared with your peers for trade review.

Obviously your accountability partner can play both roles if they have a trading background.

However, it’s more important your accountability partner is someone your close to that is committed to helping you achieve goals.

A good accountability partner will call you out and question you when you’re not following your rules, and due to your respect for the individual it should sting a little.

For the remainder of this post we’re going to focus solely on your trade plan.

Once you’ve completed your plan, I have you covered on your playbook as well. (link to Playbook Guide at the end)

Why You Need a Trading Plan

Good trading should be effortless. The preparation is where the hard work comes.

Imagine two runners, on one hand someone completely out of shape trying to run 1 mile in 10 minutes versus a world-class runner. The process looks effortless for the world-class runner, and it is. They put all of the hard work into their preparation, resulting in a process that is effortless.

Your Trade Plan and Playbook are part of your preparation.

The objectivity and clarity that a solid plan provides is essential in a market that requires split second decision making to capitalize on opportunities.

It will empower you to trade objectively, with confidence and less emotional involvement.

Let’s take a look at some categories you will want to include in your plan.

Trading Plan Outline

This outline is a strong base to get you started. You can use this plan for all markets, including Stocks, Forex, Futures, Options, and/or Crypto.

Remember, there’s no formal rules so get creative!

1. Premarket Routine

Developing routines in our lives helps us to stay on track and reach goals. 

By analyzing our current routines and making adjustments, we’re able to form new habits. A skill that is rewarded in this business.

Here’s a great video on the importance of simple routines, especially when starting your day.

Try it, what do you have to lose?

Outline the tasks you will perform prior to trading each day.

Examples: -Read trading plan -Review a personal journal entry twice a week and reflect -Read prior day’s trade journal -Review prior day’s trades -Check economic numbers -Read playbook -Mirror reflection -Pre-market Analysis

2. Visualization/Mantras

Visualization and Mantras are great tools to include in your morning routines.

Examples: -Visualize yourself taking a trade and going through all the steps outlined in your Playbook -I accept that I have no idea what the outcome of any individual trade will be -I accept that today could be a negative day -I accept the loss of my next  trade financially -I accept I will get stopped out on trades that reverse and rip in the direction of the setup

3. Hard Rules

You want to get very specific with some macro rules for your trading business. They should be reviewed with your accountability partner on a monthly basis at minimum. I recommend meeting weekly or daily if you’re a new trader or not yet profitable.

Examples: -3 losing trades switch to SIM remainder of session -Take a random trade, switch to SIM remainder of session -Two max loss days back to back, SIM for remainder of week -No trading outside RTH

4. Risk Management

You don’t need to over complicate your risk management. Below is what I recommend to my students.

Example: -1% max per trade -3% max per day -5% max per week -15% max per month -Adjust trade size on Monday mornings

IMPORTANT! You should never trade real money until you have proven your ability to be profitable on a simulated account!

I promise, if you can’t make money on a simulated account, you won’t do it on a live account.

Don’t start trading a live account until you’ve proven you have acquired the necessary skills to make money on SIM.

5. Aftermarket Routine

All traders make mistakes. The question is whether or not you will analyze those mistakes to learn from them?

When the trade day ends, you still have work to do.

You should do some journaling and reflection on your execution for the day.

Keeping a  trade journal of all your trades as well as grading every trade is essential for growth. Make sure to take screenshots of your trades as well so you can go back and review them.

Here’s a few more examples: -Complete Scorecard for ever trade taken that day -Complete journal entry discussing market conditions for the day and reviewing your execution -Input trades into spreadsheet or whatever you’re using for analytics -Meditate -Workout

Trading can be emotionally challenging at times. There’s not many professions where you go to work and perform your best yet at the end of the day you leave with less money than you started.

Keeping mentally fit is imperative in this business. It’s important you incorporate some stress relieving activities, such as meditating or working out, into your aftermarket routine.

6. Weekend Routine

On Sunday evenings I have a routine to prepare myself for the upcoming week.

-Read trade journal entries from the past week -Review trades from the past week -Check sizing -Goals for upcoming week -Meet with Accountability Partner

7. Monthly Routine

On a monthly basis you should perform a thorough analysis on your trading business.

Examine your processes and trading analytics, looking where you can improve.

Examples: -Review trade analytics and make adjustments to strategies -Backup everything -Check risk management and sizing -Write main goals for upcoming month

8. Goals/Achievements

The markets are always changing and presenting new opportunities as well as challenges. Even after 20 years, I still find myself learning new things.

Reflecting on why you started trading in the first place is important. Don’t ever lose sight of your goals.

Keep track of your goals and achievements in your trade plan as you progress as a trader. You will find it encouraging as you start to see your progress.

Examples: -Zero random trades for a week -Average trade score of X for the month -First chop comma ($1,000 net day)

While I think all these categories should be included in your own plan, remember to get creative and include anything you feel could potentially improve your trading.

Maybe include some pictures to motivate you.

Free Trade Plan Template (Download)

I created a template in Google Sheets with the categories and examples covered in this post to get you started on your trade plan.

If you would like the template and some other cool trading tools,  become a JT Insider. It’s free.

I also recommend you check out this guide “How to Become A Day Trader – (Here’s how I did it…)”. I share with you how I overcame my trading failures by developing an Objective Edge.

Final Thoughts

Whenever a student comes to me struggling, I ask them for their trade plan. The struggles typically lead back to a rule or set of rules they have outlined in their Trade Plan that they’re consistently breaking.

It’s an essential tool when reviewing your trading with your accountability partner. Remember to select someone close to you must be completely transparent with them or you’re only cheating yourself.

Don’t make trading more difficult than it already is. Write a solid plan and work on having the discipline to follow it.

Anything not mentioned you like to include in your plan? Leave a comment below!

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Trading Plan: 6 Steps to Create One + Examples

Trading Plan: Key Takeaways

• The keys to building a personalized trading plan…
• How to fit your plans to your unique trading style…
• Discover how trading plans help me find the day’s potential movers within 60 seconds of the market open…

See this BEFORE the market opens tomorrow! 

It can be hard to navigate the markets in today’s crazy world. Constructing a bullet-proof trading plan that will carry you through is a must … It can be the difference between surviving and fading out of the market.

How do you do that? Let me show you…

Table of Contents

• 1 What Is a Trading Plan?
• 2 Do You Need a Trading Plan?
• 3 Planning: The Key to Long-Term Trading Success
• 4 Trading Plan Essentials
• 5.1 #1. Set Goals 
• 5.2 #2. Focus on Risk 
• 5.3 #3. Do Your Research 
• 5.4 #4. Plan Your Entry and Exit 
• 5.5 #5. Write It Down 
• 5.6 #6. Review the Trade Afterward
• 6 Trading Plan Examples
• 7 Trading Plan and Trading System: What’s the Difference?
• 8 How to Combine Your Goals With Your Trading Style
• 9 Long-Term Benefits of Trading Plans
• 10 Frequently Asked Questions About Trading Plans
• 11 Who Uses a Trading Plan?
• 12 Can I Alter My Trading Plan Any Time?
• 13 What Key Elements Should Be in a Trading Plan?
• 14 What’s Next?
• 15 Conclusion

What Is a Trading Plan?

It’s your outline of a given trade. It defines why you’re making the trade and how you’ll execute it.

A good plan takes into account your trading style, risk management , and expectations. It lays out your entire approach to trade, from the ticker to your entry, exit, goals, stops, and more.

Traders who build thorough plans and follow them are more likely to keep a level head — and less likely to make big mistakes…

Do You Need a Trading Plan?

Trading plans aren’t sexy. Many traders are quick to dismiss them as unnecessary. They’d rather focus on the more exciting aspects of trading … like hot stocks, chart spikes, or catalysts.

Big mistake! While those things can help you choose stocks to trade, you need to combine them with a plan to get the best results.  

Technically, no, you don’t need a plan to make a trade … But if you want to follow the trajectory of consistent traders before you, you’d be smart to use one.

A good way to build a trading plan to fit your account is to use an all-in-one trading platform like StocksToTrade . It has the essential trading tools and features that can help you formulate a game plan for each day. Try StocksToTrade today — start your 14-day trial now!

Planning: The Key to Long-Term Trading Success

A trading plan gives you a clear-cut plan of attack for entering and exiting a trade.

It’s the difference between a calculated trade and the ‘hold and hope’ mentality that causes so many traders to lose money .

You know how I feel about bag-holding (DON’T DO IT)…

Without a plan, you’re pretty much gambling. You might win here and there, but your progress won’t be as reliable as it would be with a plan in place.

Many traders who don’t use plans begin to see their losses exceed their gains, and they ultimately give up on day trading.

Don’t become a cautionary tale … Make a plan every time!

Trading Plan Essentials

Your plan for a trade should cover essentials such as an entry/exit plan, risk management, and trading goals.

• An entry/exit plan should cover the key points at which you’ll enter a trade (buy) and when you’ll exit a trade (sell)… 
• Risk management is all about limiting your losses . The less money you lose — especially in your early trades — the longer you can stay in the game. This can help you build healthier long-term trading habits. Determine how much you’re willing to lose on every trade. Not every trade will be a winner.
• Stop-loss orders and limit orders are great ways to help minimize risk. Losses are part of the game. Be ready to cope with that.

Each trader’s plan is unique. There’s no one plan to fit all. Build one that best suits your trading needs and goals.

6 Tips for Creating a Useful Trading Plan

Now that you understand the benefits of building plans for your trades, here are some tips on how to do it…

#1. Set Goals 

What do you hope to gain from this trade? Do you want a 10%, 20% gain? Set realistic profit goals. 

And if you’re new, it can help to start small. Then increase your goals as you become consistent. Focus on gaining practice and experience.

Some of the best stock traders recommend starting small . You can size up once you learn and find some consistency.

#2. Focus on Risk 

What’s your risk tolerance? Only YOU can answer that. 

Before you enter a trade, consider how much of your portfolio you’re willing to risk on a given trade. Many traders stick to a rule of risking no more than 1% or 2% of their account. 

If you have a small account, you may decide to risk a little more to gain a bigger position… 

Or you may decide to risk less to try to nail down your process and avoid blowing through your account. Either way, only trade with money you can afford to lose. Trading is risky!

#3. Do Your Research 

Before you enter any trade, do your research. Seek out the big gainers , study the stock charts, and research potential catalysts. 

Be diligent! Research can help you determine how a stock might perform. You can never be 100% sure, but you want to be able to say you did all you could.

I find a lot of the big potential plays within 60 seconds of the market opening … But I wouldn’t know which ones I feel comfortable trading if I didn’t do my due diligence beforehand.

#4. Plan Your Entry and Exit 

Make a specific plan about when you’ll enter and exit a trade. 

Decide which buy signals will be your green light to enter a trade and only enter when you see them. StocksToTrade’s Oracle Scanner does a wonderful job of showing good entry and exit points.

The exit is just as important as the entry, if not more … Consider what you’ll do if a trade starts going south. 

What’s your stop loss? When will you get out if things don’t go your way? Resolve to get out at this point, and don’t take it personally. Never trade on your emotions. 

Using easily identifiable chart markers like the low of the day can be a good point of support to set risk. And certain resistance levels, like the high of day, can act as good points of entry.

Know your profit target, too. Get out once the trade hits your goal. Don’t get greedy.

#5. Write It Down 

Write down your plan. Literally. 

There’s a sense of accountability that comes with physically writing down your plan. And keep it where you’ll see it. 

It’s another way to hold yourself accountable. And you have that information to review for future trading…

Trading is a game of lessons. Knowing what works and what doesn’t helps guide your future trading.

#6. Review the Trade Afterward

After you make a trade, take time to consider how things went. 

Keep your notes from your plans and on how your trades play out in a trading journal or log. That can give you insight into what went right or wrong. And again, you can use that knowledge in future trades. 

You’ll get an idea of where you need to be more diligent.

Trading Plan Examples

Here are a few examples of a potential trading plan with some recent runners…

EZFL 2-day chart (Source: StocksToTrade)

EZFill Holdings, Inc. (NASDAQ: EZFL) was a great example of one of my favorite patterns to trade — the dip and rip . It checked off a lot of boxes:

• Early-morning press release
• Low floater

EZFL dipped before the market open and continued up. Your plan could have been to set your entry at an appealing premarket level and your exit close to that premarket high.

I personally would wait for it to reclaim premarket highs. But my plan doesn’t work for everyone. Some like to buy off the initial bounce.

EZFL tried that level a few times and failed, showing why it’s important to stick to your plan and not get greedy.

Another good example is ChemoCentryx, Inc. (NASDAQ: CCXI).

CCXI 5-day chart (Source: StocksToTrade)

This was a swing trade idea as a weak open red-to-green …

It ran in previous days and was holding up despite a weak open. This showed it had the buyers to support its current level despite the huge gap-up days before.

It ended up running the next morning before finally seeing a sell-off…

You could have used a current day or prior day level of support as your risk and that well-defined top as your exit point.

Remember, write down all of these decisions as well as WHY you make them.

Trading Plan and Trading System: What’s the Difference?

Trading systems don’t rely on individual decision-making whatsoever … It relies on algorithms to determine everything.

This isn’t necessarily a bad thing. A lot of traders use this style. 

A trading plan is more personalized. Also, algorithms can’t account for traders’ emotions.

Doing research and understanding how the market might react to a stock can give you a huge edge. It’s not just indicators and trading signals like a trading system.

How to Combine Your Goals With Your Trading Style

Every trader has different goals. Some want to day trade. Others want to hold long term. You may have to tinker around to find what suits you.

Do you know what kind of trader you are and what your goals are?

How often do you want to trade? What kinds of stocks do you want to trade? What’s your risk tolerance? 

These are all important questions to ask yourself before you begin trading.

If you hold a 9-to-5 job, day trading may not work for you. You may want to swing trade or even hold stocks longer term. 

The type of trading you choose should play a big role in your plans.

Long-Term Benefits of Trading Plans

Trading plans can change your relationship with trading. They can help you stop chasing ‘bright and shiny’ stocks and start making calculated trades.

So much in trading is beyond your control. But you can control when you exit and enter of trades. 

Learning how to create a plan is essential to your trading education.

Frequently Asked Questions About Trading Plans

Here are some common questions about trading plans…

Who Uses a Trading Plan?

Any trader can and should make plans — new traders, long-time traders, day traders, swing traders. It’s a key step. If you want to be a smarter trader, consider using one.

Can I Alter My Trading Plan Any Time?

Of course! Don’t set your plans in stone. They’re something you’ll work on and improve throughout your trading career. That said, stick to your plan once you’re in a trade. Remember your entry/exit and risk management.

What Key Elements Should Be in a Trading Plan?

At a minimum, set your entry and exit, risk management, and trading goals. Those are the key elements of any plan. You can include as much detail as needed for your research. Remember, the details you track for every trade can help your analysis down the road.

What’s Next?

Using the tips I just gave you, take the time to learn how to craft your trading plan. Test strategies to find what works best for your trading goals. 

And if you’re looking to take your trading to the next level, consider joining the SteadyTrade Team. It’s a community of dedicated traders from around the world, run by seasoned pros. 

Our SteadyTrade Team mentorship program is all about helping traders learn to navigate today’s volatile markets. Sign up for the SteadyTrade Team today!

Adaptation is a key to surviving the markets. Building a trading plan around the ever-changing market can help you find your edge.

That’s why it’s important to study up and continue to learn. 

Adapting doesn’t have to mean changing your risk levels or goals. Keeping those in mind will help you stay true to yourself while finding your way forward.

Now, time to get your trading plans in order!

How do you plan your trades? What’s essential for your plans? Let me know with a comment below!

• Trading Basics

Having a Trading Plan: Treat Your Trading Like It’s a Business

Learn how to approach your trading like a business with these five essential components.

Key Takeaways

• Know the five components that should be part of any trading plan
• When creating a trading plan, make sure it aligns with your financial goals
• Having a trading plan and following it can help you avoid making emotional financial decisions

As Benjamin Franklin wisely said in the 1700s, “By failing to prepare, you are preparing to fail.”

Fast-forward to 2021 and apply this to your trading or investing approach. How much have you prepared?

Any small business owner knows a business plan is essential. No bank is likely to give you a loan without a business plan. The goal of trading is to potentially grow your wealth, similar to that of a small business investment. So, if you haven’t taken the time to write a trading plan, carve out some time this weekend. By the way, this is something you can share with your partner.

(Hint: Good communication with your significant other about trading plans can help keep everyone on board with the approach, desired goals, and time investment needed for successful trading.)

Five Essential Components of a Trading Plan

Set specific financial goals. Write down your specific objectives, but try to dig deeper than simply “saving for retirement.” This could be a dollar amount within a specific time frame. For example maybe you want to make a profit of $1,000 a month from your trading. Or it could be a specific percentage gain you want to see in your portfolio within a specific time period. The financial decisions you make should align with your objectives.

Determine your buy criteria. This could take weeks or months to refine and could evolve over time as market environments change. Spend time studying, learning, and developing an approach that works for you. Do you buy stocks based on fundamental or technical analysis, or a little of both? Are you a fundamental stock picker, but like to use charts to fine-tune entry points?

• Write down a specific fundamental criteria to look for in a stock. This could include P/E ratio, annual earnings increases, or rising dividends. It’s a good idea to know earnings and dividend dates ahead of time.
• What indicators do you use and what signals do you need for confirmation? Do you want to follow trends, or do you want to invest in specific asset classes? Develop a plan and paper trade it. Once you’re comfortable, write it down and adhere to it. This is an important step because you’re looking to get the necessary information that can help you make your investing decisions.

Know when to sell. One of the cardinal rules of successful trading is knowing where to exit before getting in to a trade . If the market starts moving against you, you should be prepared to take your losses and exit your position. So, it’s important to plan your exits. If you’re a technical trader, you could use potential resistance levels from long-term charts (think weekly or monthly) or chart pattern targets such as a break in a head and shoulders neckline. Make a plan for exiting profitable and losing trades, write it down, and automate an exit point. You could include the following:

• Stop orders. Sometimes markets can move against you by quite a bit. Placing a stop order at the time you place your entry can help protect your positions. Where you place the stop is related to how much you’re willing to lose on a trade. It could be a percentage or dollar amount. It’s a personal choice and could involve analyzing past price moves to find what works best for your comfort level.
• Trailing stop orders. These are a type of stop order that dynamically follows market prices and can be used to protect long and short open positions. For a long position, a trailing stop can be set at any value below market price, and for short positions, a buy-to-close order can be placed above market price. For example, say you want to buy a stock at $25 per share and would like to protect it with a trailing stop. You could place a trailing stop order of $2, which means the stop order will rise as the stock price rises, but if the stock price falls $2, the stop order becomes a market order to close the position.

Stop market orders do not guarantee an execution at or near the activation price. Once activated, they compete with other incoming market orders.

Plan for tomorrow by setting financial goals today.

Identify your trading or investing time frame.  Determine your trading time frame. Are you a short-term swing trader, looking for two- to three-day opportunities, or do you want to hold positions for multi-month moves? Maybe you do both, i.e., have some longer-term investments and some that are shorter term. Write it down.

Develop a risk management plan.  Trading is about taking risks, so it goes without saying that risk management is very important to successful trading and investing. Consider setting specific risk parameters that you’re comfortable with, such as when to protect your capital, when to take profits, and the size of your positions. Remember: You’re operating in an uncertain environment, which means you’re likely to have losses. The key is to minimize those losses, and that means you should be ready to take action when necessary. There are different ways to manage risk. Here are a few examples.

• Some traders look for a risk/reward ratio of about 1:3, which means they’re willing to risk $1 to potentially earn $3.
• Some traders follow the so-called 2% rule, which means they’ll never risk more than 2% of an entire portfolio in one trade.
• Some traders allocate specific percentages of their portfolio to different assets for better diversification.

How to Measure Trading Success

When it comes to trading, hard work can pay off. What’s work when it comes to trading? Keeping a trading journal and reviewing trades on a weekly or monthly basis can be helpful. Write down the five essential components of a trading plan and compare your trades against them. What went right? What went wrong? Did you risk too much? Are you following your trading plan, or did emotional trading take over? A review process can help keep you accountable and allow for adjustments as needed to help you pursue your goals and approach trading like a business.

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Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

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NASA is asking for help to retrieve Mars samples that could be the first evidence of alien life

• NASA's Perseverance Mars rover is collecting samples that could be evidence of ancient alien life.
• But NASA's Mars Sample Return mission to bring them to Earth will now cost $11 billion and take two decades.
• NASA is scrapping that plan now and asking companies for a better idea.

NASA bit off more than it could chew when it sent the Perseverance rover to Mars to collect samples.

The $2.4 billion mission landed the rover in Jezero Crater , the site of an ancient lake. It's the ideal spot to search for the fossils of Martian microbes that may have existed when the planet was lush with lakes and rivers.

Perseverance's main mission is to collect samples of the rock and sediment along the lake bed and the crater rim, in hopes of finding a sign that life once thrived on the red planet. The rover has done a fine job — so far it's secured 24 samples — but NASA no longer knows how it's going to bring them to Earth for analysis.

NASA's original design for the retrieval mission, called Mars Sample Return, has fallen apart. The agency is asking companies to step in and propose better ideas.

"We are looking at out-of-the-box possibilities that could return the samples earlier and at a lower cost," Nicola Fox, head of NASA's Science Mission Directorate, said in a press briefing on Monday. "This is definitely a very ambitious goal. We're going to need to go after some very innovative new possibilities for design, and certainly leave no stone unturned."

NASA's old plan costs $11 billion and takes too long

NASA's original proposal for the Mars Sample Return is "mind-bendingly complicated," David Parker, director of space exploration at the European Space Agency, said in 2021.

The idea was to launch two rockets toward Mars, one carrying a lander and one carrying an orbiter.

Related stories

The lander would be the largest ever sent to Mars. It would touch down near the stash of samples that Perseverance set up, deploy a rover to fetch the sample tubes, and load them onto a small rocket attached to the lander.

Then the rocket would launch the samples into Mars orbit, where it would eject them toward the orbiter, which would be the largest spacecraft NASA ever sent to Mars.

The orbiter would have to grab the samples, journey back to Earth , and drop the sample vessel on a fiery plummet to our planet's surface, where a team would retrieve them.

The mission plan relied about $4 billion in new technology and a decade of mission design and construction.

But the projected cost has ballooned to $8 to $11 billion since Perseverance touched down at Jezero Crater. Independent reviews have also concluded that instead of one decade to bring the samples to Earth, it would take two.

"The bottom line is that $11 billion is too expensive, and not returning samples until 2040 is unacceptably too long," NASA Administrator Bill Nelson said in the briefing. "It's the decade of the 2040s that we're going to be landing astronauts on Mars."

At the current price tag, Mars Sample Return would "cannibalize" other NASA missions, Nelson said. So the agency is calling all hands on deck, inside and outside of NASA, to come up with a new plan.

NASA wants companies with 'tried-and-true' technology

Fox said that NASA needs to see short proposals from companies or laboratories by May 17. Then the agency will choose a few of those competitors to further develop their ideas over a 90-day period, with complete proposals on NASA's desk by late fall or early winter.

Some of NASA's most tried-and-true contractors include Lockheed Martin, Northrop Grumman, Boeing, and SpaceX. Startups like Astrobotic and Intuitive Machines are getting their foot in the NASA door through the agency's new moon program.

"What we're hoping is that we will be able to get back to some more traditional tried-and-true architectures," Fox said. "Anything requiring huge leaps in technology usually, from experience, takes a lot of time."

As for the return trip from Mars to Earth , that will be a technological leap no matter what.

"We've never launched from another planet, and that's actually what makes Mars Sample Return such a challenging and interesting mission because it really is the first of a kind," Fox said.

Watch: This asteroid dirt might explain the origins of life on Earth

• Main content

UK's Thames Water makes new clean-up pledge in bid to raise prices

• Proposes additional 1.1 bln stg investment for 2025-2030
• That would bring total expenditure to 19.8 bln
• No extra increase to rise in bills already set out
• CEO says discussions with regulator continue

Britain's Thames Water said on Monday it would spend an extra 1.1 billion pounds ($1.4 billion) on tackling sewage spills and fixing leaks to try to persuade the regulator to allow it to hike bills by 40%.

The company wants to raise bills to stabilise its finances as it struggles under the weight of 16 billion pounds of debt, but Ofwat, the regulator, wants to minimise the bill increases.

Thames Water said it would increase investment in environmental projects if allowed to impose a 40% jump in prices it had already proposed for the 2025-2030 period.

It added it could spend another 1.9 billion pounds on environmental projects, but that would result in a 44% rise in bills.

Thames Water, which supplies about a quarter of the British population, was thrown into crisis last month when its owners said they would not provide a 500-million pound equity lifeline.

Britain's privatised water industry has come under scrutiny after sewage spills have jumped, after some owners had been paid big dividends and had loaded companies with debt.

Public outrage over pollution and the prospect of higher bills has put the regulator under pressure to ensure consumers get value for money, but investors say they still need to make returns, resulting in a stand-off over Thames Water.

"We will continue to discuss this with our regulators and stakeholders," Chief Executive Chris Weston said.

Ofwat said on Monday the industry's statutory commitments had been clarified, and therefore companies had needed to revise their plans.

"We note that Thames Water has now published an update to its business plan. We will publish our draft view on companies' plans on 12 June," Ofwat said.

Thames Water hopes its plan will be a basis to secure equity investment from existing or new shareholders.

Its parent company, Kemble, said earlier in April it had defaulted on its debt after missing an interest payment, raising the prospect of collapse.

Finance Minister Jeremy Hunt said last week that Thames Water must sort out its own issues, warning that Britain would never insure investors against bad decisions.

The 40% bill rise proposed by Thames Water compares to the 31% increase proposed on average by the other water companies in Britain for the five-year period.

Thames Water's nine shareholders include Ontario Municipal Employees Retirement System, the UK's Universities Superannuation Scheme, a unit of the Abu Dhabi Investment Authority and the China Investment Corporation.

($1 = 0.8077 pounds)

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Bubble tea maker Chabaidao slumps 10% in Hong Kong’s biggest 2024 debut

SICHUAN Baicha Baidao Industrial, also known as Chabaidao, plunged 10 per cent in its trading debut, indicating diminished demand for shares of companies making hugely popular bubble tea.

Shares traded as low as US$15.74 at early trade on Tuesday (Apr 23), after being sold at HK$17.50 apiece. The company, China’s third-largest maker of fresh tea drinks by sales value, raised about HK$2.59 billion (S$450 million) in Hong Kong’s biggest initial public offering (IPO) this year.

Chabaidao, meaning “100 varieties of tea”, is raising money at a sluggish time for new share sales in Hong Kong and as competition in the sector intensifies. Its shares declined more than 10 per cent in grey-market trading on Monday.

The share performance may influence decisions by tea chain operators such as Hunan Chayue Cultural Industry Development Group, known as Sexy Tea, and Mixue Group to tap the market.

Ten companies have had IPOs in Hong Kong that raised at least US$300 million over the past two years. They have dropped by an average of 2.6 per cent in their first session, data compiled by Bloomberg show.  

Bubble tea, a sweet drink filled with sticky balls of tapioca, has been gaining popularity, creating at least a half-dozen billionaires in China in the past few years. Growing competition, however, threatens to take out some of the weaker players.

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Chabaidao founders opened the company’s first outlet in 2008 in Chengdu, the capital city of Sichuan province. A franchise model in 2018 turbocharged growth, taking the number of shops across China to more than 8,000. In January, Chabaidao opened an outlet in Seoul, its first outside China.

Chabaidao expects to use about half the proceeds from the IPO to improve operations and strengthen its supply chain, according to terms. China International Capital is the sole sponsor of the IPO. BLOOMBERG

KEYWORDS IN THIS ARTICLE

China’s bubble tea boom creates a half-dozen billionaires.

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