Most traders have a "trading plan" that lives in their head. It goes something like: "I trade London session, I look for setups on XAUUSD, I try not to overleverage." This isn't a trading plan. It's a vague intention — and it will not protect your funded account when the market moves against you and your emotions take over.
A real trading plan is a document so specific that it removes decisions from the moment of trading. The goal is to make your trading plan before you're in a trade, so that when you're in a trade — with real money, real emotions, and real stakes — you're executing instructions, not making choices.
This guide builds a complete trading plan for prop firm traders, step by step.
Why Most Trading Plans Fail
Trading plans fail for one of three reasons:
Too vague: "I'll trade momentum setups with good risk-reward." This doesn't tell you when to enter, where to put your stop, or when to step away.
Not written down: Mental plans dissolve under pressure. Write it down. If it's not in a document, it doesn't exist.
Not enforced: A plan you break every other day isn't a plan. It's a suggestion. Your journal should track rule compliance, not just P&L.
The prop firm model creates unique pressure that makes vague plans dangerous. FTMO, Funded Next, and The5%ers don't care about your intentions. They track equity, daily loss, and drawdown in real time. One emotional decision at the wrong moment ends your funded career.
Section 1: Define Your Edge
Your trading plan starts with a brutally honest answer to one question: why do you make money when you make money?
Not "I'm good at reading charts." Not "I've been trading for 5 years." Specifically — what setup, in what market conditions, at what time of day, produces your profitable trades?
If you can't answer this specifically, start here before writing anything else. Pull your trade history from the last 3-6 months. Identify your 20 most profitable trades. What do they have in common?
Common answers:
This is your edge. Your entire trading plan is built around protecting and repeating it.
Section 2: Define Your Setups Precisely
Once you know your edge, define it with rule-based precision. For each setup you trade, document:
Entry criteria (all must be true to enter):
Invalidation criteria:
Stop loss placement:
Take profit approach:
If you can't write down specific rules for each of these, the setup isn't defined yet. Go back to your trade history and keep looking for patterns.
Section 3: Risk Management Rules
This section is non-negotiable for funded traders. These rules must be so clear that there's no interpretation required in the moment.
Risk per trade:
Pick a number and commit to it. Standard recommendation for funded accounts: 0.5% to 1% risk per trade. This means on a $100,000 FTMO account, you risk $500-$1,000 per trade maximum.
Write the formula: Lot size = (Account balance × Risk%) ÷ (Stop loss in pips × Pip value)
Never size by feel. Use the formula every time.
Maximum daily loss:
Most prop firms enforce this for you (FTMO: 5% daily, Funded Next: 4-5% daily). But your personal limit should be lower — never trade up to the firm's limit. Set your own at 2-3% maximum daily loss. If you hit your personal limit, trading is over for the day, regardless of how confident you feel.
Maximum weekly drawdown:
Set a weekly limit before you know whether you're winning or losing. "If I lose X% this week, I stop and review before trading again." Many prop firm traders use 3-5% as a weekly circuit breaker.
Maximum positions:
How many open positions do you allow simultaneously? Hint: for most setups, the answer is one. Correlated positions (long XAUUSD and long EURUSD simultaneously in a risk-on move) are effectively the same trade with 2x the risk.
No-trade conditions:
When do you refuse to trade regardless of what you see?
Write these out. "I will not take any trade 30 minutes before or after a red-folder news event" is a rule. "I try to avoid news" is not.
Section 4: The Daily Routine
A trading plan isn't just about what you do when you're in a trade. It's about your entire process.
Pre-market routine (30 minutes before session opens):
During session:
Post-session:
Section 5: Rules for Prop Firm Challenge Mode
If you're in a challenge (not yet funded), your plan needs challenge-specific rules:
Profit target pacing:
Don't try to hit the profit target in the first week. For FTMO's 10% target over 30 days, aim for 0.5-0.7% per day. Patience is the strategy.
Daily max win rule:
This sounds strange, but consider capping your daily gains too. If you hit 2% in a day, stop. Walking away up 2% is always better than turning it into a -1% day by overstaying.
Don't count trading days:
Obsessing over the minimum trading day requirement leads to taking setups that don't exist. Trade when your setups are there. Skip the session when they're not.
Never trade just to "check the box":
The worst funded trader mistake is entering a trade because you "need to trade today." No setup is always better than a forced setup.
Section 6: How to Track Rule Compliance
Writing a trading plan is 20% of the work. The other 80% is execution and accountability.
Every trade in your journal should include a rule compliance field:
At the end of each week, calculate your rule compliance rate. If it's below 80%, you're not executing your plan — you're improvising. That's a process problem that needs attention before a drawdown problem appears.
TMI's AI Mentor analyzes your trade history against your stated rules and surfaces violations automatically. Instead of manually reviewing every trade, you get a weekly pattern report that identifies your most common rule breaks.
Your Trading Plan Template
Here's a condensed framework you can adapt:
My Edge:
[Describe your specific profitable setup in one paragraph]
Entry Criteria (all must be true):
1. [Setup requirement]
2. [Timeframe requirement]
3. [Session requirement]
4. [Confluence requirement]
Stop Loss: [Specific placement rule]
Take Profit: [Specific exit rule]
Risk per trade: [X]%
Daily loss limit (personal): [X]%
No-trade conditions:
Daily routine:
Rule compliance target: 85%+ weekly
Start Enforcing Your Plan Tomorrow
The difference between funded traders who survive long-term and those who blow account after account isn't strategy. It's discipline — the gap between knowing your rules and following them when it matters.
Your trading plan won't make you profitable overnight. But it will make your mistakes visible, your progress measurable, and your accountability unavoidable.