By John Rhodes
This article will explain exactly why you need a Forex market trading plan. Furthermore, we'll give you a couple of simple ideas to get started with your own personal foreign exchange trading plan.
When is the last time you took a trip out of state to a place you have never been before? Did you get into your vehicle and just start driving, hoping that you will just somehow find your destination? Ok, yes, perhaps it would be fun to discover new territory without a road map, but most times you will find it hard and very frustrating to get where you want to go.
That is why you make plans, and creating a trading plan is no different. It is, in fact, way more important than a simple road trip!
Forex marketer trading plans are meant to make you create a roadmap on where you are currently, where you want to go, and the rules you will need in order to help you get there.
Creating an FX trading plan involves writing down your goals and objectives in your trading venture. You will want to keep it as simple as possible, but with enough detail and with strict rules so that when you start to question your trading, you can look back at your plan and get back on track. Having a trading plan is a key to consistency, which is the cornerstone of your trading life.
Having a trading plan also allows for continuing growth and expansion of your trading career. If you stick with your plan, you should be able to gradually and continually increase your trading account, giving you the ability to trade larger lots, and hopefully make a good living from doing so.
There is an adage in the trading community that you will hear and see quite often:
Plan Your Trade and Trade Your Plan
You will find that this is very easy to say, but can be very difficult to do. However, it is essential that you follow the advice. All it means is that you create your trading guidelines (setups to watch for, entry rules and exits, and what you are allowed to risk on each trade) and then follow through with what you have written.
Here are some key things that make up a trading plan:
Your System: Are you a day trader or a swing trader? What charts do you watch? What indicators do you watch? What are your entries and exits? What is the most you are willing to risk per trade?
Your Goals: What dollar amount do you want to try and achieve the first month, second month, etc.? What is your yearly income goal? What dollar amount is your "drop dead" figure (meaning at what point or loss of capital do you stop trading for good)? What do you want to get out of trading?
Your Weaknesses: Do you tend to overtrade FX? Do you stick with your money management rules? Do you overreact with anger?
You can find sample trading plans on the internet and please use them to create your own, custom Forex trading plan.
Create it, stick to it, read it, re-read it, and revise it as needed. Doing so will give you an advantage over many other traders that simple will not take the time to create one!
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Source:www.isnare.com |
