How to Write a Trading Plan for a Prop Firm Challenge
A trading plan for a prop challenge fits on one page: what you trade, when, which setups, how much you risk, when you stop, and how you review.
A trading plan is a written set of rules for how you trade. It covers markets, sessions, setups, risk per trade, a daily stop and a review routine. For a prop firm challenge, it also turns the firm’s rules into tighter personal limits, so you never trade near a breach. Below is how to write each part, a worked example of the risk section, and a fill in template you can copy.
Key takeaways
- Write the plan before you buy the challenge, and check that it fits the account’s rules.
- Pick one or two markets and one session, so you learn how they normally behave.
- Each setup needs exact entry, stop and exit rules that someone else could follow.
- Set a personal daily stop below the firm’s daily loss limit, and a review routine you will keep.
Markets, sessions and news
In a challenge, the rules are fixed but your decisions happen live, often right after a loss. A written plan moves the big decisions to a calm moment. During the session you only check whether a trade meets the rules.
Start with what you trade. Choose one or two markets you can watch closely, because each has its own rhythm, typical range and news calendar. Some examples:
- EURUSD or GBPUSD: most liquid in the London and New York overlap, roughly 8am to noon New York time.
- The ES or NQ contracts, or their micros: busiest around the 9:30am New York cash open.
- Crude oil (CL or MCL): also reacts to the weekly US inventory report, so know when it is due.
Then set a trading window, such as 8:30am to 11:30am New York time, with a hard end time. Trading outside the window is a plan break, even if the trade wins. Finally, list the releases you will not trade through, such as US CPI and Nonfarm Payrolls at 8:30am New York time. Say what you do with open trades before them.
Setups: rules someone else could follow
Most challenge traders need one or two setups, not ten. For each one, write down:
- The context that must be true, such as price above VWAP and above the prior day high.
- The exact trigger and the entry order you will use.
- The stop: where it goes and why that price proves the idea wrong.
- The exit: a target, a trailing rule or a time exit.
- When to skip it, such as a spread above a set size or a release within 15 minutes.
A good test of a rule: two traders reading it would take the same trades. “Buy strength” fails that test. “Buy a 5 minute close above the opening range high, stop below the range low” passes it. If a setup is untested, read how to backtest a strategy before you write it in.
Risk per trade and daily stop: a worked example
This section keeps you in the challenge. Base it on the account’s rules, not the balance.
Example figures: a $100,000 account with a $2,000 daily loss limit, a $4,000 maximum loss and a $6,000 profit target.
- Personal daily stop: half the daily limit, which is $1,000.
- Risk per trade: $250, so four full losses reach the personal stop.
- Maximum loss check: $4,000 ÷ $250 = 16 full losses before the account fails.
- Target check: if your journal shows an average of $300 net per trading day at this size, $6,000 takes about 20 trading days.
- Consistency check: if a firm caps any one day at 30% of total profit, keep your best day under $1,800.
Add rules for the day itself. Cap the number of trades, stop after three losses in a row, and never raise size after a loss. Many traders also set a daily profit point where they stop, so one good morning is not given back. The reasoning behind these limits is in daily loss limits explained.
Your review routine
A plan without review drifts. Keep the routine short so you actually do it.
- After each trade: log entry, stop, exit, size, the result in R and dollars, and whether every rule was followed.
- After each day: mark the day green or red for rule following, separate from profit.
- Each week: total R by setup, the biggest loss, the rule breaks, and one change to test, if any.
- Change the plan only at the weekly review, never in the middle of a session.
Our free trading journal tracks R and rule breaks per setup, which makes the weekly review a few minutes of work.
A fill in trading plan template
Copy this list and fill in every blank before your first challenge trade. If you cannot fill one in, that part of your trading is not yet decided.
- Account: firm, size, daily loss limit, maximum loss and whether it is static or trailing, profit target, minimum days, news and consistency rules: ____
- Markets (no more than two): ____
- Trading window: from ____ to ____ New York time. Hard end time: ____
- News: releases I will not trade through: ____. I will be flat ____ minutes before them.
- Setup 1: context ____ / trigger and entry ____ / stop ____ / exit ____ / skip if ____
- Setup 2: the same fields, or none.
- Risk per trade: $____ (about a quarter of the daily limit or less).
- Personal daily stop: $____. Stop after ____ losses in a row. Maximum ____ trades per day.
- Daily profit stop: $____ (checked against any consistency rule).
- After a losing day, my next day size is: ____
- Review: daily log by ____ each day, weekly review on ____.
- Plan changes: only at the weekly review, written down with the date.
How this fits prop firm rules
The plan’s job is to keep you far from every limit while your method has time to work. Check each rule against your numbers:
- Daily loss limit: is your personal stop well inside it, counting open losses as well as closed ones?
- Maximum drawdown: is it static or trailing? A trailing floor rises with your profit until it locks, so plan how your size will change.
- Consistency and minimum days: does your average day fit them without forcing big days?
- News and holding rules: does any setup need to hold through news or overnight?
Rules vary by firm; check each firm’s page in our prop firm directory, then use find an account to match an account to your plan and budget.
Questions traders ask
How long should a trading plan be?
One or two pages. If it is longer, you will not check it during a session, so keep the extra detail in setup notes and your journal.
Should I change my plan during a challenge?
Only at a scheduled review, and only for a clear reason backed by your log. A rule changed right after a loss is usually emotion, not evidence.
What if a trade breaks my plan but wins?
Log it as a rule break anyway. Winning rule breaks train you to break rules, and the losing ones tend to arrive later at a bigger size.
Trading carries a high risk of loss, and a plan does not guarantee a pass. Most prop firm accounts are simulated. All figures here are examples, and nothing here is financial advice.