Forex trading plan
A trading plan in the FX market isn’t really any different from any other plan you could imagine. It is an outline of your planned trading activities, something like a to-do list when it comes to trading Forex online. The main idea of the trading plan is to develop a set of rules that you are going to adhere to and how you are going to implement them. Once you have the rules written, it is much easier to apply them as there is a clear plan of action on how they need to be followed. In addition to this, a trading plan can help you analyse the market better and apply your analysis to your trading strategy.
Developing a Trading Plan
A trading plan is an organized approach to executing a trading system that you’ve developed based on your market analysis and outlook while factoring in risk management and personal psychology.
No matter how good your trading plan is, it won’t work if you don’t follow it.
Forex traders who follow a disciplined approach are the ones who survive year after year after year.
They can even have more losing trades than winning ones and still be profitable because they follow a disciplined approach.
How to Build a Four-Point Trading Plan
Trading plans are a lot like insurance: People don’t usually want it until they’ve already faced a catastrophe. But after that catastrophe; maybe it was a big loss on a single position, or perhaps even worse, a margin call from one bad trade, the trader will often recognize that something needs to be done.
But regardless how one gets there, just the fact that they arrive at the destination of realizing that a trading plan isn’t just a preference, but often a necessity is generally a positive development in the career of the trader.
Trading plans contain a routine and check list
To put it simply, you NEED to have a routine in your trading activities; otherwise you will just end up running and gunning the seat of your pants. I have a trading philosophy that revolves around trading Forex like a sniper and not a machine gunner, if you want to trade like a sniper you have to have a routine that you follow, and you have to be disciplined…a sniper in the military is an extremely disciplined individual, and you need to think of the Forex market like it’s a war, and you are a sniper trying to take only the ‘easiest prey’; your ‘prey’ in the markets consists of only the most obvious trade setups.