Lesson 3: How to develop your own trading plan?

Lesson 3: How to develop your own trading plan?

Home >> Lesson 3: How to develop your own trading plan?

All Lessons

Always stay up to date with our latest news

Are you ready to take your trading skills to the next level and explore the world of prop trading firms? Joining a prop firm can provide you with access to more capital, advanced tools, and a supportive community of traders. However, just like independent trading, having a well-defined trading plan is paramount to your success. In this blog, we’ll walk you through the essential steps to develop your own trading plan tailored for prop trading.

How to develop your own trading plan?

Let’s get into it one by one. .

Understand the Firm's Objective

Before crafting your trading plan, grasp the goals and strategies of the prop trading firm you’re planning to join. Different firms may have varying objectives, rules, and market focuses. Align your plan with the firm’s objectives.

Define Your Personal Goals

While working with a prop trading firm, you still have your own aspirations. Define what you aim to achieve financially and professionally. This will help you tailor your trading plan to your personal ambitions. But remember to do it within the confines of the firm’s guidelines.

Assess Risk Parameters

Prop firms have specific Daily Drawdown and Max Drawdown rules. Understand the maximum loss allowed per trade and overall. As well as any position sizing restrictions. Adhering to these limits is crucial to maintaining your standing within the firm.

Adapt to the Firm's Trading Style

Each prop trading firm might have a preferred trading style or strategies that they specialize in. Whether it’s day trading, scalping, swing trading, or others, adapt your plan to align with the firm’s expertise.

Choose Trading Instruments

Determine which trading instruments the firm allows. Develop your plan based on the instruments you’ll be trading within the firm’s portfolio.

Develop a Strategy within the Guidelines

Craft a trading strategy that aligns with the firm’s risk management and trading guidelines. Define your entry and exit rules, technical and/or fundamental analysis methods, and the timeframes you’ll be trading while still maintaining the prop firm’s guidelines.

Backtest and Adjust:

Before trading live, backtest your strategy on historical data to assess its performance. Since prop firms may emphasize strategies, make sure your strategy fits their criteria and can withstand diverse market conditions. Some prop firms don’t allow swing trading; some allow that. So make sure you know which firm you are choosing.

Leverage Firm's Tools and Technology

Take advantage of the advanced tools, software, and technology provided by the firm. These tools can enhance your analysis, execution, and risk management capabilities.

Follow the Firm's Routine and Hours

Prop firms often have specific trading hours and days in which you have to achieve your profit target. Adhere to these schedules.

Keep Detailed Records

Just like with independent trading, maintain a comprehensive trading journal. Document your trades, strategies employed, reasons behind decisions, and the outcomes. This data will be invaluable for performance review and improvement.

Regular Performance Evaluation

Frequent performance reviews are common in prop trading. Assess your performance against the firm’s targets and your goals. This will help you make necessary adjustments to your trading plan.

Embrace Continous Learning

Prop trading firms often provide educational resources and mentorship. Make use of these opportunities to expand your trading knowledge, refine your strategies, and adapt to changing market dynamics.

Emphasize Discipline and Adherence

Trading within a prop firm requires strict discipline. Adhere to risk management rules, trade execution protocols, and any other firm-specific guidelines. This discipline ensures consistency and compliance. Legitimate prop firms are always looking for serious and disciplined traders..

Patience and Preservance

Becoming a successful trader within a prop firm takes time. Stay patient, embrace the learning curve, and continuously refine your trading plan based on your experiences.


In conclusion, developing a trading plan tailored for a prop trading firm involves integrating your personal aspirations with the firm’s objectives and guidelines. This collaborative approach enhances your chances of success. Remember that while the prop trading environment offers advantages, it also comes with responsibilities. By crafting and adhering to your trading plan, you’ll be well on your way to navigating the exciting and challenging path of proprietary trading.