When people start trading, they will focus on finding the most profitable trading strategy. After the right strategy has been chosen, traders usually think that they only need to apply it and profits will come. But there is one thing that is usually forgotten by traders – trading plan.
A trading plan is a written list of actions that must be taken to achieve trading objectives. This list can consist of various trading methods or a detailed description of the trading process.
The plan gives a trader an answer about what, why, how and when it should be done so that his trading strategy becomes profitable.
The first thing a wise person must do when he starts a business is to make a business plan. He will explain his purpose, steps to achieve it and all aspects of the business in this plan.
Having a clear goal is one of the keys to success for a forex trader.
The same is true in trading, a trader must make a trading plan before he starts working on the currency market. When implementing a well-planned trading plan, discipline and caution are needed.
Having a clear goal is one of the keys to success for a trader. A clear plan will motivate the trader to carry out his intentions. In addition to this, this provides an opportunity to compare the results achieved with those planned. If there is no plan, it will be difficult to determine whether a trader has reached the goal or not.
Another advantage of a trading plan is that it helps to make the right decision in a critical situation, when emotions can make a trader confused. As market conditions change frequently, it is very important to know how to act in various situations. So, a trading plan will provide an opportunity to control yourself.
Fill in the trading plan
There are no specific rules about how the form of a trading plan and consists of anything. The content of a trading plan usually depends on a trader, because the plan is made as comfortable as possible for him.
However, the contents of a trading plan can be divided into three main parts: personal, business and trading.
The private section should contain a personal point of view about the goals of a trader, motivation and ways to succeed. Such a point of view must be believed and carried out with effort as hard as possible in real life without caring about any challenges or obstacles that will arise.
Private parts should not be related to technical aspects, only contain desires, aspirations and expectations of the trading process. For example, a trader expects that trading will give him the opportunity to spend more time with his family.
knowledge and skills that a trader wants to use. It is also necessary to set a trading goal in order to improve trading skills. It would be better if the goal is not related to money but with the development of trading. For example, the purpose of trading for the first year is to increase volume and minimize losses.
A trader must also consider all the shortcomings of Forex market knowledge to prevent losses that can occur.
The trading section is the most important part of the plan. This section contains details step by step of the trading process. Things like time period, preferred strategy, trading conditions, volume and others.
The financial component does not play the last role in trading. So you should think about managing money. This is important to protect the money out of the account. To fulfill this, a trader must decide how much part of his balance can be used in trading. As well as the expected benefits, this must also be calculated and added to the trading plan.
The worst conditions that might occur should be predictable and things like this should not be a surprise for a trader.
The last thing that must be included is an emergency plan that should be used in the case of an unexpected situation. This is one of the keys to the success of a trader, to know how to act on this situation. The worst conditions that might occur should be predictable and things like this should not be a surprise for a trader.
After a trading plan is ready, you should only just apply it. Pay attention when trading, needed to do a recording of what has been done to be able to compare the actual results with those that have been planned.
So, have you made a trading plan? It’s time to start planning your trading process. A trading plan is your way to make comfortable, successful and profitable trading. So, don’t waste your time, start making your plans now!