How to Build a Trading Plan for GBPUSD H1 Chart

Traders, today we are going to go over a way of preparing a trading plan. We’ll consider what to expect if such a plan comes together during Forex trading. Please note this is not a trading plan for current markets, as you will see this after the trades are already over.

Traders, today we are going to go over a way of preparing a trading plan. We’ll consider what to expect if such a plan comes together during Forex trading. Please note this is not a trading plan for current markets, as you will see this after the trades are already over.

Where to Start?

Here are some objectives I look for:

1. The current trend on a timeframe I am working with. This could also be called a Bias
2. Price action — is the chart tradable or non-tradable.
3. Resistance levels
4. Support levels
5. Add on like a Fibonacci indicator
6. Entry Price
7. Take Profit Price

This is a shortlist of items that we want to establish on the price chart to plan our trade. It is so important that we do not ever chase price. What does that mean? Well, if you open a chart and see a big green candle moving to the upside, we are not going to just hit the mouse and enter long. This will get you out of this business very fast and you will blow your account and have no funds to trade tomorrow. 

Let’s Practice on Example

Now we’ll try to build a trading plan using the following chart:

The first thing I see on this chart is that it has a bearish (downside) trend. I like to trade with the trend, however, I do countertrade at times as I will show you on this chart.

Let’s look at the resistance level on this chart. We have a nice level at 1.2880 and also at 1.2860. So you see on the chart I have placed an entry price at 1.2860. If price action takes this up to 1.2890, that would be a good chance to take a sell trade from there. Thus, I have two entry levels for this bearish trade. 

I always look to the left from my current price action, to see if there are some levels that could hinder my trade. This will not necessarily prevent me from taking the trade, but I will be cautious when price action gets close to this price. On this chart, when we look left, we see the price at 1.2840 might be an issue to look for. However, if we entered at 1.2860, we are 20 pips in profit, so I would protect my trade if needed. 

I set my goals high for my profit zone. It’s great when price works and hits my price for profit. I am not greedy even if it only goes 50% I will look at price action and see how I want to manage the trade. In this trade, you can see that I am looking to make a profit at the price level of 1.2750. There is a lot of price action to the left of the current price, so this trade will not be easy and might take some time to work for us.

How to Manage Your Trading

Trade management is an extensive topic and it would take me forever to explain everything. So, for now, I will talk about this particular trade and what I might do when this trade moves.

• Place a Stop Loss. I would look at 1.2910 for my protective Stop Level.
• Enter a trade in full. If I feel this is a good trade with probabilities on my side, I will use my maximum lot size.
• Monitor your trade. If it is going against you, get out of the trade. Your Stop Level is for emergencies only. We can always re-enter the trade at a better price.
• Scaling out the trade. When the trade is working and I am gaining profit, I like to scale out of my trades and pay myself as the trade works. Usually, by the time I reach profit, I am only about 25% of my lot size I started with. 
• Scaling into the trade. Many traders prefer to scale into the trade. So when the trade works, they add more lots to the trade. There is no right or wrong way to do this. It all depends on your personal preference.

In closing, my saying is “Trade Small and Trade Often“. If you are not in the market you cannot make profits. We all take a loss and that is okay.