10 Steps To Building A Winning Trading Plan.
I’ve been trading for more than 26 years. One thing that I think many Forex Traders need to remember is this. The Forex Market does not owe anyone anything. Understanding this then your trading will be much easier. The object or name of the game is to enter the market with the understanding that each of your trades may in fact be a slowing trade and you are okay with losing that predetermined amount of risk each time.
Professional Traders look reasons why NOT to enter a trade and then after weeding our low probability trades they enter the market with a well planned out exit strategy plan in place. Any other method is paramount to gambling.
I totally agree that no-one should be trading without a “Trading Plan” that is complete with his/her rules for their trading strategies, which also has a well thought-out and defined risk management and draw-downs strategies.
95% of Retail trades lose for a reason. One of those reasons is having false expectations i.e. what they “think” they can get from the Market. There are so many LIES told to new and inexperience traders.
However to answer your question I trade and look for only high probability trades using Naked Price Action. I never risk more than 2% on any given trade and often less than that. I trade Daily and Weekly time-frame just like the GREAT Fund Manager George Soros, Bill Lipschutz and Stanley Druckenmiller. Learn from them and it just might keep you in the game long-term. There is absolutely no need to reinvent the wheel.
Have a magnificent day on PURPOSE!
FXALTareeq
I look at pips, bucks, percents and win and loss ratios. Tracking what I am doing and adjusting my plan. Lets say my goal in $500.00 a month with a 5K lot. That is 1,000.0 Pips (50.0 pips per day). Min win is 750.0 pips, average is 1,000.0 pips, best is 1,250.0 pips (per month). Then I break this down with win to loss ratio, percentages and bucks. This how I have been working my plans on excel. There is more too.
I don’t plan properly every step, but have a minimum goal to make $700 in a month. If I get them, my trading strategy works good, if not - it’s time to analyze what was done wrong and what I have to fix.
Perhaps what you have to fix is already stated very clearly in the first 6 words of your own post? 
You still have to depend how large your account is to earn 700 bucks per month. If you are trading with 300, how are you gonna earn 700 per month.
Heres a little math: $700.00 per month at 20 days a month equals $35.00 per day. Bidding hours is 5:am to 9:am PST equals $6.00 per hour (rounded up). win ratio of 50/50 equal three time 6 equal 18; one 6 loss, one 6 to cover, one 6 to win. For $18.00 an hour or an average of 20.0 pips an hour. (round up because not pips cost are equal). At at 5% each round you will need 1000.0 pips in an account. This can and should be adjusted to fit your own goals. This example helps my trading.
Thank you every one for your great input and comments.
Here is how my maths works:
500 trades per year with 60% win ration means :
500x0.6=300 winning trades @ 45 pips = 13,500 pips
500x0.4=200 losing trades @ 30 pips = 6,000 pips
Net pips made = 7,500 pips per year @ $10 per pip for ONE contract = $75,000
Pips made per day = 7500 / 250 trading days per year = 30 pips per day @ $10 per pip for ONE contract = $300 per day
Risk per trade = 30 pips @ $10 per pip for ONE contract = $300
Using 2% as max risk :
Risk Capital Required = $300/ 0.02 = $15,000 per ONE contract (gives you $10 per pip)
If you have $30,000 in your trading account, you can use TWO contracts and each pip will be $20 making it $150,000 per year rather than $75,000 per year.
The important point is to understand how much is your RISK TOLERANCE.
Using 2% of your capital as max risk for your trade gives you peace of mind to trade confidently.
The mistake most of us make is to increase our risk tolerance (falsely) and use more than 2% of our capital per trade.
Where are you covering your losses?
+45.0 pips -30.0 pips to cover a 30.0 pips loss = 15.0 pip gain, times 100.0 good wins = 1,500.0 pips
ratios 0.2 = win: 0.4 = loss: 0.4 = to cover losses = 0.2+0.4+0.4=1.0.
Correct me if I am missing something here.
Yes, you are missing the point: (keep the math simple and straight forward)
I have 500 trades per year
Each trade is set with initial 30 pips Stop Loss (means you can not lose more than 30 pips on losing trades)
Each trade is set with 45 pips Take Profit target
Out of 500 trades, there are 60% winning trades (500 x 60% = 300 trades)
Out of 500 trades, there are 40% losing trades (500 x 40% = 200 trades)
300 winning trades x 45 pips = 13,500 pips won
200 losing trades x 30 pips = 6,000 pips lost
Net pips = 13,500 - 6,000 = 7,500 pips won
Oh you lads do give me a hearty laff with all this silly maths talk. Time to get serious about your trading or get out of the kitchen. 100 trades win ratios, up/down, what a load of bull. Stop talking theory and get in and get some hard facts by actually trading.
Now, to the OP, about targets. Targets are for archery, darts and gun clubs. They should play no part in your business plan. What you need to set are your own goals. These vary from each of us. But generally we are all here seeking a return not investing. Investing in money IMO is actually pretty damn stupid.
Next, pips mean nothing. They are a unit measurement of price and hold no valve. Dolar valve of a 45 pip gain on the EURGBP is not the same as 45 pips on EURNZD. So never think in terms of pips. Its easy to have a nett gain in pips but still loss considerable money.
Always think in percentages. To make $700 a month of a $7000 account means you have a return goal of 10%. This should be achievable to most. I will even go as far to say that if you are not trying to earn a return around 5 to 10% a month then why bother. It’s simply not worth the time.
But before you can think about any of this, you need to get some hard data about your trading. First by backtesting then by forward testing. No more of this silly maths. Now go out and trade lads…
Thank you for your input on setting the goal/target of 5%-10%. Much appreciated.
Goals, targets, objectives … all words mean the same thing in this context.
And just give consideration to the fact that every one here in this forum may not be as experienced as you are to understand things the way you understand. People have varying degree of level of understanding and they perceive things differently. Some people understand maths, some understand logic, some go with rationality, while others go with reality. Let’s give some room to every one for their way of understanding.
Thanks once again for your insight on this topic.
No, no they don’t. Due to a series of ill financial events I’m in the process of rebuilding my trade account. Therefore, my that’s my goal. It will require an aggressive trading plan where I risk considerable more per trade than I would normally. Luckily, I have a history of trades behind me, some excellent back testing skills and some basic programming skills. So I’ll be back on course soon. What it doesn’t involve is targets. No 20% a month target. No 45 pip take profit target, no 500 trades a year bla bla bla. Each trade is taking on it’s merits, money and trade management rules applied (even if that is as simple as 2% risk, 1:1 RR ratio.) All built on hard data collected from hour upon hour of back tests. Hour upon hour of live screen time. The moment I start to force trades, break the rules, predict the market, revenge trade, etc etc, my system fails (I reason I like algo trading). For no other reason than I have gone outside my rules which I have developed from collecting this hard data. I take what the markets give and let the rest take care of itself.
Experience is a relative term bro and experience is something you gain from trading live. You just have to do it bro. Even a small $100 account yields a better learning curve than maths theory or demo trading. There are many more here far more experienced than myself but they wish not to share that knowledge. Indeed a great deal of knowledgeable members have left over the years simple because noobs question their experience when they don’t deliver the answers they want to hear.
So get trading live bro and do it as quickly as possible. The data will quickly bring perspective to the questions you pose. Best of luck my friend,
Bob
Fully agree, BBB! 
Setting daily, weekly, monthly targets in terms of pips, cash or percentages, etc does not make a lot of sense in a business where the market itself controls what it is going to offer. Some months provide excellent trading conditions whereas other months can be erratic, directionless, stagnant, etc. The ROI is as much dependent on the market opportunities as it is on one’s own skills in taking advantage of them.
IMHO it is better to concentrate on optimising the output from one’s own methods in terms of risk and money management and then take best advantage from whatever opportunities the market offers.
+1, well said bro.
Great advice BBB and thanks for the good luck wishes.
Just to put things in perspective, I have been trading live since summer of 2013 and the maths I put up in previous posts is based on my personal stats of live trading and not on backtesting.
Cheers,
Well, you should be the dispensing advice not asking for it. With the figures you’ve delivered your account should be up well over 500%. We all would like to know how to achieve that!
Actually my intent to start this thread was not to seek advice. Rather it was to generate a discussion on how different people manage their trading and yet they are all successful in their own ways. There is no absolute in trading. We all trade differently based on how we see things on technical and fundamental aspects.
And yes, I have been very fortunate to never ever blow up my trading account since I started live 3 1/2 years ago. The single most thing that has helped me in my success is the “Discipline to follow my Trade Plan”.
I treat my trading like a business, and there are up and down cycles in trading just like any other business, but at the end of my business accounting year the bottomline is positive. I wish every one success in their trading venture.
Cheers,
I personally do not use profit targets. I believe that it’s too precise of a figure for markets in general. No matter what you will always feel bad.
What makes sense to me, is to get out of my trades when an opposite signal occurs. I then make a decision if I want to hedge or takeprofit and go with the other direction
Funny how everyone thinks of nailing the entry with some analysis , but never uses the same for exit. Interesting
Nah, I didn’t mean that I don’t do planning work at all 
I just don’t have certain goals per day. I clearly understand that I can make 50 pips during one day and 20 during another.