My Journey Into Forex - Part 2 of 3 (My Forex Trading Plan)
Trading is not just a business…it’s a lifestyle! It can provide financial freedom, personal achievement and professional success.
However, you won’t succeed and won’t reach any type of success without a trading plan. A trading plan is a document that reminds you of your purpose and mission in trading and investing, your goals, your daily actions and routine, your trading strategy and criteria for risk management. In essence, a trading plan holds you accountable.
Your purpose and mission for trading can’t be to make money. Making money is a product of trading. You need to know your “why”. The “why” needs to be non-financially incentivized. For example, one of my “whys” is to spend more time with family & friends.
Because trading is psychological, your trading plan will ensure you enter/exits trades consistently and according to your strategy / edge even when you mentally become unstable.
The really cool thing about a trading plan is it will help you determine if you have a viable strategy / edge in the Markets. Having a trade plan allows you to judge each trade consistently. Without a trading plan, you cannot improve your trading or tweak things where necessary.
In order to determine if you have a viable strategy / edge, you should perform 30 -50 trades according to your trading plan and see if your account increased or decreased. This could be done by back testing your strategy or forward testing though simulation trading.
Some trading plans include daily trading actions and rituals. Successful traders have routines and do the same things over, over and over each day. Routines create good habits, good habits create consistency and consistency gives you the opportunity to reach at your peak performance when trading.
This was my first ever trading plan that I created back in 2015 and it's still viable today.
I fined tuned it over a couple of months. It’s still relevant and it’s to the point, I recite it in my sleep. My forex trading planned was a huge part of my self-discover as a trader, helped me push through the wall of discipline and kept me focused and determined during drawdowns.
My trading plans are my map, enroute to fulfilling my trading purpose / mission.
Upvoted ($0.19) and resteemed by @investorsclub
Join the Investors Club if you are interested in investing.
Great post in creating a trading plan. Do you have any core long term positions? Do they follow a similar plan or incorporate and fundamental analysis?
Thanks. The only long term positions I have at the moment are on oil. My other plans have the same core strategy of supply and demand and risk management. I pay attention to fundamental analysis like sector rotation and intermarket analysis, but primarily trade the charts. I will build more longer term positions in the Markets once the Stock Market definitively starts heading down.
It seems like a good plan even that you would consider, that you could use other tools an example this website https://www.dailyforexjournal.com/ can fall like a glove you just have to learn to see what type of investor you are and especially which broker you choose to have an advantage over people who do not have your knowledge.
Trading plan and strategy go hand in hand. There are forex strategies you can use like - https://www.independentinvestor.com/forex/strategies/ but you have to follow them and stick to them. It's not as easy as it sounds as traders get easily tempted to deviate from their own plans when the emotions kick in.