We remind you that a large market player employs a whole staff − analysts, financiers, lawyers, risk managers, and only then − the last link − traders. These professionals create trading as a full-fledged business, so you, as an independent participant in the market, have to combine all their qualities.
Let’s get to the point.
... for anyone who is just starting their path in the Forex market. Beginners usually do not understand that the Forex trading plan and the rules of trading strategy are different things, and therefore any advice on using it is ignored.
«− The plan? What plan? Do I have a plan? Yes, I have three plans!» − ambitiously stated Mr. Fix, the hero of the famous cartoon film, which became a symbol of unsuccessful planning. Unfortunately, the punishment in the market in form of losses comes quickly enough, but the ability to make an effective scheme of actions gives the trader an indisputable advantage.
Let’s check the mandatory sections of such business plan − in order of importance for real trading.
First of all, you need ...
Conclusion: Your business objectives should be real and confirmed by the actual results of the previous transactions if necessary − we should correct them.
I will risk to give an example from personal trading experience.
A few years ago, on a popular Forex broker, a regular PAMM-project was opened with a low entry threshold for investment, without promises of "super profits" and special trading conditions.
Except for one − the manager set a goal to receive 1% of profit for each trading day with minimal risks. The trader did not advertise himself; he did not communicate at forums; did not give comments and did not explain his actions. This project was unpopular among investors, trading conditions were regarded as unprofitable, the trader was considered ambitious, inexperienced or simply lazy. In the general rating of broker trading account did not rise above 25 positions.
This PAMM-project closed the trading year with a profit of more than 300% and a maximum (!) current drawdown of 15%. All aggressive PAMM-accounts that were opened simultaneously with him, "left" the market with losses within 2-3 months, and this quietly worked strictly according to plan.
Investors came to their senses, but they were already late. The trader changed the speculative Forex to a more stable stock market, received an invitation from a major US investment fund and lost interest in small investors.
Conclusion: A reasonably designed trading plan should contain optimal trading objectives and then its rigid execution can protect your deposit from losses.
A well organized brain costs more than a brain well filled up.
Then you can start the next stage ...
Conclusion: The quality of each trade depends on the preliminary calculation of all possible situations.
The next main section ...
Conclusion: The analysis and formulation of actions will allow you to assess the probability of success before the opening of each transaction, as well as find weaknesses in the trading system.
Now − the next step ...
Conclusion: Assets should be adapted for the strategy (see above!), are optimal in terms of the number of costs and the level of risk.
If you have already made a decision, on what exactly you will trade − go to the most important section…
Conclusion: Personal honesty and discipline while observing the risks in each transaction will save you time, nerves and capital.
Conclusion: The Forex trading plan should take into account the influence of the foundation on making trading decisions on the working strategy, for each asset − separately.
Conclusion: The result directly depends on the technical justification of each transaction and its proper maintenance.
Taking into account the conditions of personal comfort, we choose ...
Conclusion: We trade at the time of maximum liquidity for the selected asset or in periods with the greatest number of trading signals.
If today i will not have the patience - then tomorrow i will not have money
Conclusion: Daily mandatory analysis of the actions, regardless of the results of trading, will identify weaknesses, correct strategy in time and open up new trading opportunities.
Conclusion: The necessary correction and regular (in accordance with strategy) analysis of the trading plan (together with the results of transactions) − are mandatory.
Reminder: your Forex trading plan should allow changes in any section without compromising the final result.
Conclusion: It is necessary not only to estimate the profit (or loss), but also to analyze the thoughts, emotions, and situations in which you have violated your trading plan for Forex.
If a book about financial failures doesn't sell, is it a success?
On rational planning, you can also read a very reasonable book.
Freedom of access to the modern financial market shouldn’t not mean the lack of discipline in your actions. The Forex trading plan details goals and means, strategy and tactics, preparation and implementation of transactions, investment schemes and risk management, analysis of results and methods for solving other problems.
And it's not so important whether you consider Forex a serious business or only an additional income − you can achieve the goal only if all conditions are strictly met, otherwise even the optimal business plan will not bring results.
Trading psychology is one of the essential pillars of the Forex success, so even if you are an experienced trader, you shouldn’t dismiss a trading psychology advice.
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Share your personal experience of creating your Forex trading plan. Was this article useful for you? It is important for us to know your opinion – share it in the comments!