Your forex trading plan and weekly review

What you will learn

• Which forex-specific sections belong in your trading plan beyond general risk rules.
• How to measure net currency exposure across several open pairs.
• How to run a weekly review with expectancy, profit factor and rule compliance.
• How to prepare the next week from the economic calendar and central bank dates.

Explanation

General trading plans, journals, R-multiples and personal risk policies were covered in the courses "Trading" and "Risk Management". A forex plan adds rules for what makes currencies special: everything is traded in pairs, many pairs share one driver (often the US dollar), positions are held overnight with swaps, and central banks move prices on known dates.

Forex-specific plan sections

• Pair universe: a short, fixed list, for example 4–6 pairs whose sessions match your available time. Pegged and emerging-market pairs only with separate, smaller limits (see lessons 8 and 9).
• Sessions: the hours you trade and the hours you do not, written in German time and checked when summer time changes.
• Event filter: no new positions from, for example, 30 minutes before to 30 minutes after central bank decisions and top-tier data for the currencies involved.
• Currency exposure limit: a maximum total risk tied to one currency, for example 1.5% of the account for all trades that are short the dollar together.
• Overnight and weekend rules: whether you hold positions through rollover and weekends, and how you account for swap costs.
• Leverage cap: your own maximum, below the legal limit (30:1 for major pairs for EU retail CFD clients).
• Broker and cost check: the account type and average cost per lot from lesson 10, rechecked every quarter.

Net currency exposure

Break each position into its two currencies. Long EUR/USD means long euros and short dollars; short USD/JPY means short dollars and long yen. Add the amounts per currency. Correlation between pairs was covered in lesson 6 of this course; the exposure ledger turns that idea into numbers.

Weekly review (about 45 minutes, same time every week)

1. Numbers: trades, win rate, total R, expectancy (average R per trade) and profit factor (gross profit ÷ gross loss, both in R).
2. Compliance: how many trades followed every rule? Mark each breach.
3. Costs: spreads, commissions and swaps compared with the plan.
4. Exposure: did the currency limit hold at all times?
5. Next week: list central bank meetings, inflation and employment releases, and holidays that reduce liquidity; write if-then scenarios, not predictions.
6. One change at most: decide whether a rule changes, based on a sample, not on one trade.

Worked example

Hypothetical example: one week of results in R: +1.5, −1, −1, +2, −1, +1.5, −1, +0.5.

• Trades: 8; winners: 4; win rate: 50%.
• Total: 1.5 − 1 − 1 + 2 − 1 + 1.5 − 1 + 0.5 = +1.5R.
• Expectancy: 1.5 ÷ 8 ≈ +0.19R per trade.
• Profit factor: gross profit 5.5R ÷ gross loss 4R ≈ 1.38.

Exposure check on Thursday (hypothetical, EUR/USD 1.10, GBP/USD 1.30):

Each trade risked 0.5%, but all three are short the dollar: together 1.5% depends on one driver. That exactly hits the example limit; a fourth short-dollar trade would breach it. One week is far too small a sample to judge a strategy; the numbers are logged and judged over many weeks.

Common mistake

Practice activity

Your week shows these results in R: −1, −1, +2.5, −1, +1, −0.5. Calculate total R, expectancy and profit factor. Then write one sentence on what you would and would not conclude.

Key takeaways

• A forex plan adds pair universe, sessions, event filter, currency exposure limit, overnight rules and a leverage cap.
• Split every position into currency legs to see net exposure, especially to the US dollar.
• Review compliance, costs and exposure before profit and loss; change at most one rule per review.
• Prepare each week with a calendar and if-then scenarios instead of predictions.

Next step

Continue with the course "Derivatives: Futures, Options, CFDs and Certificates" to understand the instruments behind leveraged trading in more depth.