The worst mistake a rookie trader could make is to dive in the trading market out of excitement with no plan whatsoever. This article describes what your plan must include to help you succeed.
What is the highest rollercoaster you have ridden? The thrill of going down and then rocketing up is really amazing, and it makes you want to repeat and repeat again. Well, online forex trading can be thrilling too, but you have to remember that it is a business not a game, so you don’t trade to get that feeling. To trade seriously and successfully you need to have an online forex trading plan.
Are you wondering what a trading plan is? It isn’t any different to other plans. You have to think of your objectives, asses your skills and resources and then design and write down the actions you will take when certain events happen. A good plan will take into account all the different posible outcomes of your actions to make sure you reach your objective. It will stop you from making tragic mistakes and will put a rain to your emotions so that they don’t interfere with your judgement
What Your Online FOREX Trading Plan Must Include
Trading time and frequency. That’s the first step. Some traders hold a position for just a few hours, others try to hold it for years. So, decide your trading type. At the beginning, it could be good to choose maybe a day as a unit to evaluate your progress.
Then decide how many times you will trade. This is especially important since it will stop you from emotional trading. If you determine you will trade 8 times, respect your decision. It will also help you to look in detail each opportunity and to avoid jumping wantonly every time you see an opportunity.
Take Profit & Stop Loss. Make no exceptions. Every time you place an online forex trading order, make sure you set a Stop Loss and Take Profit. It’s important to list the Stop Loss Points in your plan to make sure you don’t lose more than you can afford. Familiarize yourself with the trading program before you begin, whether it’s your broker’s proprietary software or the standard forex mt4 platform. You need to know it well in order to use its features, e.g. custom orders.
Determine your entry and exit signals. Don’t let your excitement be the force driving you to jump into a trade, expecting something amazing to happen. You should analyze the market and set entry signals—to indicate when you will open a trade—and exit signals—indicating when you will close your position. Those are vital signals for successful traders.
The Bottom Line
Stick to your plan. However, remember that sticking to your trading plan doesn’t mean that you have to sink the boat; if you see your plan doesn’t work re-assess it. Think about changing your trading time-frame or changing your strategies. The main point is that you need a set of rules that you decide prior to starting trading in order to be disciplined and avoid emotional trading. The market will go up and down, but it doesn’t have to be the same as a riding in a roller coaster.
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