Trading 111: Developing a Trading Plan for Live Trading on MT5 / 1. Why You Need a Trading Plan

A trading plan is like a business plan for traders. Without one, you’re more likely to:

 🚫 Trade emotionally instead of following a system.
 🚫 Overtrade and take random setups.
 🚫 Risk too much and blow your account.

✅ Benefits of a Trading Plan:

• Helps you stay disciplined and consistent.
• Reduces emotional decision-making.
• Provides a clear structure for entries, exits, and risk management.

📌 Example:

• A trader without a plan takes random trades and loses money due to inconsistency.
• A trader with a plan only trades high-probability setups and follows risk management rules.

✅ The second trader is more likely to be profitable long-term.

2. Defining Your Trading Strategy

A. Choose Your Trading Style

Decide which trading method suits your schedule and personality:

📌 Tip: If you have a full-time job, swing trading on H4/D1 is best.

B. Define Entry & Exit Rules

✅ Entry Rules: When do you enter a trade?

• Breakout strategy: Enter after a confirmed break & retest.
• Trend trading: Enter after a pullback to a key level with a confirmation candle.

✅ Exit Rules: When do you close a trade?

• Take-Profit (TP): Exit at major support/resistance levels or RRR target (1:2, 1:3).
• Stop-Loss (SL): Always use an SL to protect capital.

📌 Example of a Trading Strategy:

• Timeframe: H4
• Setup: Break & Retest
• Entry: After a bullish engulfing at support
• SL: Below the support zone
• TP: Next resistance level (1:2 RRR)

✅ Following structured entry & exit rules prevents random trading.

3. Setting Trading Goals

A. Daily & Weekly Trading Limits

To prevent overtrading, set limits:
 ✅ Max trades per day: (e.g., 3 trades max, no exceptions)
 ✅ Max risk per day: (e.g., Stop trading after losing 2% of your account)
 ✅ RRR target per week: (Only take trades with at least 1:2 risk-to-reward ratio)

📌 Example of a Weekly Plan:

• Goal: +5% growth per week.
• Max loss per week: -3% (if hit, stop trading).
• Trade limit: Maximum 10 trades per week.

✅ Trading goals keep you focused on quality, not quantity.

4. Creating a Live Trade Execution Checklist

Before entering a trade, run through this checklist:

✅ Step 1: Confirm Market Conditions

• Is the market trending or ranging?
• Is there high impact news that could affect volatility?

✅ Step 2: Identify High-Probability Trade Setup

• Am I trading at a key level (support/resistance/Fibonacci)?
• Do I see confirmation (engulfing candle, rejection wick)?

✅ Step 3: Calculate Risk & Reward

• Am I using proper position sizing (1-2% risk per trade)?
• Is my risk-to-reward ratio at least 1:2?

✅ Step 4: Execute & Manage the Trade

• Have I set a stop-loss and take-profit before entering?
• Am I sticking to my plan and avoiding emotional trades?

📌 Example:

• Trade Setup: EUR/USD at support.
• Checklist: Trend is bullish ✅, strong engulfing candle ✅, RRR is 1:2 ✅.
• Result: Trade executed with full confidence.

✅ Using a checklist improves consistency and trade quality.

5. Tracking Performance with a Trading Journal

A trading journal is essential for reviewing and improving your strategy.

Trading Journal Template

📌 End-of-Week Review:

• Did I follow my trading plan?
• Which trades followed my strategy, and which didn’t?
• How can I improve my entries and risk management?

✅ Journaling helps you track progress and eliminate mistakes.

6. Common Mistakes to Avoid When Trading Live

🚫 Trading Without a Plan – Leads to random, emotional decisions.
✅ Solution: Always follow your pre-defined strategy.

🚫 Risking Too Much Per Trade – Blowing your account after a few bad trades.
✅ Solution: Stick to 1-2% risk per trade.

🚫 Overtrading & Revenge Trading – Trying to “win back” losses.
✅ Solution: Set a daily trade limit and take breaks after losses.

🚫 Ignoring a Trading Journal – No record of mistakes and improvements.
✅ Solution: Review your trades weekly and improve based on data.

7. Transitioning from Demo to Live Trading

📌 Steps for a Smooth Transition:
 ✅ Trade Demo First: Ensure at least 3-6 months of profitable demo trading.
 ✅ Start Small on Live Account: Trade 0.01 lot sizes to build confidence.
 ✅ Avoid Emotional Trading: Stick to your plan, not your emotions.
 ✅ Increase Position Size Gradually: Only increase risk when your strategy is consistently profitable.

📌 Key Insight:

• If your strategy works in backtesting and demo, it should work live IF you follow the plan.

Conclusion: What You Should Learn from This Lesson

✅ A trading plan provides structure & discipline for live trading.
✅ Entry & exit rules prevent emotional decision-making.
✅ Setting daily & weekly trading goals improves consistency.
✅ Using a live trade execution checklist improves trade quality.
✅ Tracking performance in a trading journal leads to long-term success.