Forex trading plan
For trade transactions on Forex were successful, traders are advised to draw up a trading plan personally. About this element, for the trading, not once heard the trader beginners, but specifically, not everyone could understand why it is needed and how to use it. But even for many experienced traders there are sometimes irreparable mistakes in the absence of a trading plan.
- Why do traders often ignored drawing up a trading plan
- Trading plan
- Drawing up points of the trading plan
- The main benefits of the trade plan
Why do traders often ignored drawing up a trading plan
Probably, the reasons are the most simple.
- There is no desire or simply inability to perform clear, thought-out actions during the trade. Most likely, it indicates that the trader is not disciplined.
- Many market newcomers are sure that drawing up a trading plan is rather complex action that requires a lot of effort and time, and perhaps a trader simply does not know how to make it up.
It is made for carrying out of transactions on Forex and has two variants:
- Plan-table. It is recommended for use by all newcomers of the Forex market, especially those who have not yet achieved stability in conducting trade transactions and do not have their own strategy.
The advantage of the table is that it describes all the previous actions of the trader, which allow him to conduct an analysis before deciding whether to open/close a trade transaction. Since the plan describes all the reasons for opening/closing transactions, a trader can easily determine the common factors of all previously committed errors and his successes.
- The trading plan is compiled as the behavior of the Forex market prognosis (dots are pointed out, resistance line levels and the main reasons for entry/ exit from the market are indicated).
But in this respect there is one drawback, literally, in one – two weeks the graph of the terminal it is not visible, for what reasons the deals were concluded or closed. Therefore, it is better to use this plan for experienced traders.
Drawing up points of the trading plan
The plan table should consist of the following items:
- Currency pair.
- The level of the established stop-loss for the concluded transaction.
- The level of the established take-profit for the concluded transaction.
- The point of the trend reversal. Describes the further behavior of the trend line after it reverses in the opposite direction and closes the orders with the stop-loss set. In the future, it will help to determine whether it is possible to open reverse orders when the trend is reversed.
- Reasons for opening deals (simple description of incoming signals and possible compliance with the applied trading strategy).
The main benefits of the trade plan
- Thanks to the entries in the planning table, you can easily analyze almost every position, and also make a definite conclusion – there are chances of profit and whether it is worth opening a new deal.
- Will the transaction meet the requirements of Money Management (safe trade rules). If it does not fit into these rules, then it is better not to conclude a deal.
- Thanks to the detailed trading plan, you can analyze any section of the trend in time and understand the previously mistakes of failed trades.
- These advantages, which the trading plan can give, will allow the trader to get quite a good and constant profit on Forex.