Building a trading plan is an important part of having a successful trading career. It is remarkable the quantity of traders that don’t use a trading plan and still wonder why they are not making money.
In this edition of my foreign currency exchange trading tips I will be outlining how to write a trading plan that will allow you to trade properly and increase your capital week after week.
What is a trading plan?
A trading plan is an action plan that summarizes the trading strategy you intend to use, the risk and money management system you select, and any additional vital details about your trading approach.
Your trading plan will guide you during unclear market conditions: One of the main advantages you will enjoy when you use a Forex trading plan is that you will always have a reference to return to during uncertain market conditions.
Successful FX trading takes a great amount of preparation, commitment, and even a little bit of luck sometimes. When you use a Currency trading plan you are creating a backup plan that will help you to take intelligent trading decisions even when the markets don’t make sense.
Failing to plan is planning to fail: Each and every profitable trader plans his trades. Most unprofitable Currency traders lose money because they do not have a trading plan. Quite a few trade several trading systems but they never focus on just one.
A trading plan allows you to stay focus: The high level of excitement that is associated with Forex trading prevent many people from concentrating and making large profits. This is why your trading plan will be your roadmap to profitable Forex trading since it helps you to stay focused.
You have total control of your risk when you use a trading plan: Risk can not be eradicated from trading but it can be considerably decreased and controlled. Every trading plan should have a section dedicated to risk and money management. In this section you should stipulate all of your risk parameters such as: maximum risk per trade, maximum account risk at any given time, and much more.
You need to customize your trading plan and make it fit your trading needs: Every trader is different and each trader should customize his/her own trading system so that it fits their investing needs and unique financial situation.
Make changes to your trading plan in the process: Another essential step you will need to take as a trader is updating your trading plan.
The Forex is an ever changing landscape and as traders we need to adapt to and change with the market. When you make continuous alterations to your trading plan you will ensure that your trading plan matches your trading goals.
Find what works and stick with it: This has been one of the biggest lessons I have learned as a trader, investor, and as a person. Once you have found something that works, you need to stick with it and be constant, that’s the only way to achieve real success.
Foreign currency exchange trading will need you to plan your trade and trade your plan, that’s the only way to attain the results you have always wanted.
I hope I was able to help you and boost your Foreign currency trading knowledge.
Pro Trader & Educator