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How can I develop a Forex trading plan?

skrimon

Well-known member
Forex trading plan.png

A trading plan is a collection of rules used to explain trading activities. It can be a very useful tool in assisting you to plan and execute your entire trading strategy.

There is no one-size-fits-all trading technique; each trader is unique, and different sorts suit different people. However, there are several universally agreed components to consider while developing your own strategy.

Writing a trading plan is a vital step toward becoming a successful Forex trader. A trading plan's goal is to help you commit to trading guidelines so that your emotions are not affected. You are more prone to make trading mistakes, over-trade, or make impulsive actions in volatile markets if you do not keep a trading notebook. Here are ten checklists to consider while developing a trading plan.

10 Steps to Creating a Trading Plan

  • Choose which currency pairs to concentrate on.
  • Keep an eye out for big news releases.
  • Choose your preferred timeframe.
  • Examine the market to see if it is in a trend or a range.
  • Determine the areas of support and resistance.
  • Based on your plan, determine if you want a short or long setup.
  • Stay out if the strategy rules do not fit.
  • Execute if the strategy rules are met.
  • Determine the strategy's entry and exit prices.
  • Calculate lot size based on a 2% risk.

Summary

The key to success is to stick to your trading plan on a daily basis. If the deal does not match all of the trading conditions, pass on it. Follow the rules rather than your instincts. You are not permitted to engage in a trade based on your emotions. This is a huge step forward in terms of maintaining consistency on your forex trading route and avoiding emotional trading.
 

PriceNTime

Active member
I agree with all the above but would say that I don't think using more than 1% risk is necessary personally. All about risk of ruin. You can do more than well enough on 1% risk. The thing you have to remember is that you MUST test this plan. Back test it, forward test it without real money. You need to know if, objectively this plan works and if not, tweak it until it does. You simply will not be able to be 100% objective if you use real money.
 
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