Introduction

There is an adage that says “he who fails to plan, plans to fail”. This saying applies in every aspect of our lives and human endeavor. A traveler or an adventurer usually travels with a map to help him reach his destination. A sailor needs a compass to enable him reach his destination, teachers usually prepare a lesson note to help him not derail while teaching in class, countries of the world have constitutions that they operate on. All these are deliberate plans to enable this persons or groups of persons reach their desired destination and achieve their set goals.

Define and Explain in detail in your own words, what is a "Trading Plan"?

A trading plan is a strategy for locating and trading stocks that considers a number of factors such as time, risk, and the investor's goals. A trading plan lays out how a trader will locate and execute trades, as well as the conditions under which they will buy and sell securities, the size of the position they will take, how they will manage positions while they are in them, what securities can be traded, and other guidelines for when to trade and when not to trade.
Trading plans are designed and customized according to a traders target goals and set objective. Trading plans are usually road maps that are being designed by a trader. This road map helps a trader to execute his trades based on a model that he knows would help him have a successful trade.
Trading plans are usually in written form by an investor or a trader that he follows religiously in executing his trade and this trading plan is only subject to change or alteration when it fails or it no longer fits into the traders plan. In a nutshell, we can say that a trading plan consist of entry and exit rule, lots seize, open and closing position as well as risk management.

Basically a trading plan contains the following elements:

When and what to buy, how to buy, lots seize, entry and exit positions of profitable and non-profitable trades and risk management as well when to take profit.

The following are some topics that should be contained in a trading plan

One percent risk of capital per trade
That is, the distance between the entry point and the stop-loss point, multiplied by the position size, cannot exceed 1% of the account balance. Because the only unknown that must be approximated is position size, this rule applies. The trader can put 2%, 5%, or 1.5 percent of his or her capital at risk.
Assume a trader's account is worth $50,000. That means each trade can have a risk of $500 (1 percent of $50,000). They receive a buy signal at $35 with a $34 stop loss. There is a $1 discrepancy between the entrance and the stop loss. This difference is then multiplied by the total amount they are willing to risk: $500 divided by $1 equals 500 shares. If they acquire 500 shares and lose $1, their maximum risk is $500. As a result, they'll need to buy 500 shares if they wish to assume a 1% risk.

Leverage

If leverage is permitted, the trading plan should specify the amount of leverage that can be applied. Both returns and losses are boosted by leverage.
Assets that are linked or uncorrelated
The risk management process includes determining whether and to what degree connected assets can be transferred. For example, an investor must determine whether they are permitted to hold entire positions in two securities that move in the same direction. If both hit the stop loss, it could result in a double-risk situation, but if the targets are met, it could also result in a double-profit situation.

Trading Restrictions

Curbs may be used in a trading plan to prevent trading when things aren't going well. A day trader, for example, might set a rule that says they must quit trading if they lose three deals in a row or lose a certain amount of money. They will close the market for the day and reopen it the following day. Other trading constraints could include reducing position size by a certain percentage when things aren't going well and increasing position size by a certain percentage when things are going well.

Others may include:

motivation for trading, trading calendar or schedule and the available funds for trading.

Explain in your own words why it is essential in this profession to have a "Trading Plan"?

Every profession have a blue print that is documented and it is followed as a road map in achieving the professions core mandate. Engineers, Medical professional, Law, financial experts, and every other professionals have their blue print or guide to help them stay on track. Animals such as dogs usually urinate on their track to help retrace their way back. This is a plan by the dog to help it not to miss it way. Government of every nation usually have a yearly budget on how they plan to run the country and the various budgets they want to execute within fiscal year. All these is to enable the not spend blindly or engage in a project that was not planned.
So from the above we have come to see every profession and sector of life requires plan, therefore it is imperative and very pertinent that every investor or trader should have a trading plan. The forex market is known to be a very volatile one and if a does not have a trading he may lose some or all his investment.
It is essential to have to a trading plan in this profession because it will help traders give their business utmost attention seeing it as business they should be treated as one that geared towards achieving a set goal and objective.
In this profession of trading, there is no guarantee that as trader you will always win or profit from trades. However, if there is trading plan the level of having successful trades will be consistent over time.
Having a trading is key in becoming a successful trader. A trading disciplines you as trader to stick to particular course or pattern that would be for your benefit and it would not harm or make you lose your funds. So having trading plan is a self-disciplining tool that every trader needs.

Explain and define in detail each of the fundamental elements of a "Trading Plan"

There are basically four (4) fundamental elements of a trading plan namely:

Money Management:

this is the most important element in a trading plan, because without it nothing will start and everything too can also crash. Trading is basically about preservation of funds and capital and in a situation where there is no proper management of money or capital a traders success and longevity in the market is at risk. A trader methodology is important is achieving success, but proper management of money will help a trader to have a continuous cash flow and steady returns. Money management helps you to decide how much funds you would need in order to execute your trading strategy, money management also helps a trader to decide how much risk he is willing to expose himself to per trade, how will the profits coming from the trades be utilized, should it be reinvested or withdrawn for personal upkeep. All these and many forms the basis for a good many management.

Tools:

this refers to those equipment that a trader make use to carryout his trading activity. Ensure you have a good personal computer. Make sure your system is not bogged down with a lot of malware, pictures, video files etc. It is advisable to have an alternative back up mobile phone for any emergencies such as power or internet outages, and also ensure your brokers phone numbers stored in the contacts on your mobile device. This emergencies could come up when you have to exit a position, take profits, move a stop loss and then all of a sudden the phone dies or there is a black out.

Trading psychology:

this refers to a trader’s emotional wellbeing when trading. To help you as trader maintain a healthy mindset or emotional wellbeing is by having a self-evaluation test access how well you have performed in the past few days weeks and months. Trading psychology helps you not trade with fear or panic. It also helps a trader in greed management.

Methodology:

this involves the desired trading formula a trader employs to achieve in order to make profits off his trade. Trading methodology should be decided after considering some of the following questions: A trader decides what type of trading system his opting for? What trend is the trader keeping up with? Counter Trending? Support and Resistance? Mean Reversion? Range Bound?
A trader get to decide based upon his trading plan the type of instruments is will trade with? These instruments may be: Index Futures, Share Markets, CFD’s, Interest Rate Futures, Commodities, Forex, and favourite trading time frame.

Conclusion

The foundation for effective trading is a successful trading strategy. Your trading plan will almost certainly vary as your trading career progresses and you obtain more experience, as well as additional learning and trade education. It's there to serve as a road map and a guide for you!