Building a Synthetic Index Trading Plan


A trading plan is the single most important document a trader can create. Without one, every trade is a gamble. With one, every trade is a calculated business decision. This lesson walks you through creating a complete trading plan tailored to synthetic indices.

Why You Need a Trading Plan

Without a Plan:

• Trade impulsively based on emotions
• Risk inconsistent amounts
• No clear entry/exit criteria
• No way to measure improvement
• Emotional decisions dominate

With a Plan:

• Every trade follows the same process
• Risk is controlled and consistent
• You know exactly when to enter and exit
• Performance is trackable and measurable
• Logic replaces emotion

Section 1: Trading Identity

Define who you are as a trader:

Questions to Answer:

1. Available time: How many hours per day can you trade?
2. Trading style: Scalper (minutes), Day trader (hours), Swing trader (days)?
3. Risk tolerance: Conservative (0.5%), Moderate (1%), Aggressive (2%)?
4. Capital: How much can you afford to lose entirely?
5. Goals: Monthly return target? Learning milestone?

Example:

• I can trade 3 hours per day
• I am a day trader using M5 and M15 charts
• I risk 1% per trade (moderate)
• My trading capital is $500 (money I can afford to lose)
• My goal is to achieve 10% monthly return while maintaining <15% max drawdown

Section 2: Instrument Selection

Choose Your Primary Instruments:

Based on your style, select 1-3 synthetic indices:

Rules:

• Master one instrument before adding another
• Do not trade more than 3 instruments simultaneously
• Track performance per instrument separately

Section 3: Strategy Rules

Entry Criteria (All Must Be Met):

1. Trend Confirmation: Price above/below 200 EMA on H1
2. Setup: 9 EMA crosses 21 EMA on M15 in trend direction
3. Trigger: Price pulls back to 21 EMA and shows rejection candle on M5
4. Confirmation: RSI is between 35-65 (not overbought/oversold)

Exit Criteria:

• Take Profit: 2x stop loss distance (2:1 risk/reward)
• Stop Loss: Below/above the last swing on M15
• Trailing Stop: Move SL to breakeven after 1:1 is reached

No-Trade Conditions:

• Do not trade within 30 minutes of starting a session (let the mind settle)
• Do not trade if you had 3 consecutive losses that day (daily limit)
• Do not trade if feeling angry, tired, or euphoric
• Do not trade if the instrument is in a tight, choppy range (no clear trend)

Section 4: Risk Management Framework

Per-Trade Risk:

• Maximum risk per trade: 1% of account balance
• Lot size calculated using the position sizing formula
• Stop loss is always set BEFORE entering the trade

Daily Limits:

• Maximum daily loss: 3% of account balance
• Maximum daily trades: 5 (prevents overtrading)
• After 3 consecutive losses: Stop trading for the day

Weekly Limits:

• Maximum weekly loss: 7% of account balance
• If hit, return to demo for the rest of the week
• Weekly review is mandatory (every Sunday)

Monthly Framework:

• Monthly drawdown limit: 15%
• If hit, take 1 full week off, then demo for 1 week
• Monthly strategy review and adjustment

Section 5: Trading Schedule

Example Schedule:

Section 6: Trading Journal

Record for Every Trade:

1. Date and time
2. Instrument (V75, Crash 300, etc.)
3. Direction (Buy/Sell)
4. Entry price
5. Stop loss price
6. Take profit price
7. Lot size
8. Risk amount ($)
9. Result (Win/Loss/Breakeven)
10. Profit/Loss ($)
11. Screenshot (chart at time of entry and exit)
12. Notes (what you did well, what you would change)
13. Emotional state (calm, anxious, confident, rushed)

Weekly Review Questions:

• What was my win rate this week?
• What was my average risk/reward achieved?
• Which instrument performed best?
• Did I follow my plan on every trade?
• What was my biggest mistake? How do I fix it?

Section 7: Performance Targets

Progression Goals:

When to Move to the Next Phase:

• You have followed your plan for 90%+ of all trades
• You have achieved the minimum return target
• You have NOT hit your maximum drawdown
• You feel confident and in control (not emotional)

Key Takeaways

• A trading plan removes emotion and creates consistency
• Cover all aspects: identity, instruments, strategy, risk, schedule, journal
• Follow the plan rigidly — adjust only during weekly reviews, never during live trading
• Progress through phases: demo to micro live to small live to full live
• The plan is a living document — update it monthly based on performance data
• A trader without a plan is just a gambler with a chart open