Why You Need A Robust Forex Trading Plan
I am sure you want to trade forex and make money right? I hope so.This is a real business and you need to treat it like such.A successful business begins with writing a well thought out business plan.If you want to be a successful forex trader, you need to write out your very own forex trading plan.
Planning a specific set of rules for future events allows you to make better informed decisions.During extremely stressful market events, you can easily fall back on this material to help guide your decisions.Alot of beginning forex traders believe the professional fx traders trade with zero emotions.This is far from the whole truth.
Every person endures emotions when making decisions, especially those which involve money.How you choose to deal with these decisions and which actions you take will be a big factor in your monthly profits or losses.
You are not emotionally attached to profits or losses when you are not actively involved in trading. This is the best time to take a few moments and draw up your trading plan.Your mindset is more objective when you are not emotionally distracted in a trade.I suggest taking 2 hours of your time and visiting a local bookstore or coffee shop.You should enjoy this process of discovering exactly what you want as a forex trader looking to make money in the markets.
You will soon find out the answers you come up with will help you make better decisions to any market situation you are faced with in the future.You can easily check your ideas and rules to find out what you had planned for this specific event.These few hours spent at the coffe shop will reap big rewards in just a few months.
The fx currency markets are volatile and will always present you with many challenges.This will happen on a daily basis. If you can not handle this truth, you should avoid trading forex altogether.You can identify some of these challenges with the list of questions which follow.
How do I define my trading edge? Do I believe in my specific trade setups? Which currency pairs do I want to trade? What types of entry orders will I use to place trades? Where will I put my stop loss? Will I use my strategy in multiple time frames or just one time frame? What is my initial profit target? How much am I willing to lose per trade? How much am I willing to lose per day? week? month? What is the maximum drawdown percent I'm willing to withstand? How many trades do I want to take per day? week? month?
Your answers to these questions form the basis for your forex trading plan.Try to write these types of questions for yourself.Your objective is to have one of your friends completely understand these and if they had to step in and manage your trades, they could do so by following what you wrote down.
You will be much better prepared to manage your trading as a business with this approach.You will no longer react because you have a forex trading plan in place.I have seen alot of forex traders waste time searching for the "holy grail". But they fail to realize implementing a trading plan around a simple forex trading system is one of the keys to success.
If your trading plan is flawed, you will lose money. But if your trading plan is well-defined and you still lose money, you need to find a new trading strategy.
Take a few moments and build your own list of questions. Find a simple and profitable forex trading strategy. Learn how it works and then write your forex trading plan to fit your style of trading. About the Author
Tom Grennell is an avid forex trader and enthusiast. He shares his passion for this industry via his detailed writings and recommendations. His favorite Forex Trading System for Forex can be investigated further at Forex Renko Charts
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