Make A Proper Forex Trading Plan and Trade the Plan Strictly

According to survey, traders who fail to make forex trading plan are more likely to fail in trading. Thus, making a proper forex trading plan and trading with it is one of the most important things to do for those who want to be a consistently profitable forex trader. The following are the reasons why traders need a forex trading plan and how to make a proper forex trading plan.

What can forex trading plan do for traders?

1. Forex trading plan help traders have a better understanding of the forex market Making a forex trading plan is similar to making a travel plan; travelers need to plan many things before they go on a journey. For example, they need to know how and when to get to their destination, which hotel to stay and where to visit etc. All these need travelers to make research first and then make the travelling plan. When making a forex trading plan, traders also need to make research on the present market and perceive the potential price movements in the near future. During the process of research, traders will have a better understanding of the forex market, which is beneficial for the following trades.

2. Forex trading plan can help refrain from greed Greed is one of the most important reasons that lead to the failure of traders. It is a kind of emotion that can control traders and push them to overtrade and take improper positions. Most of time, traders fail to realize that they are trading with such emotions. Everybody wants to become a millionaire within the shortest possible time but the problem is that this strong desire can not only prevent traders from getting rich, but also take away the chances of making steady small income. For example, if the price moves to a degree that trader can make a decent profit, but they refuse to exit trades for they want to make more. The result is he not only misses the chances of taking the profit, but also loses a big amount of money.

3. Forex trading plan can help traders gain experience Making a forex trading plan is beneficial for traders who want to learn trading experience. After completing a trade, traders can compare the forex trading plan with the trading results. By comparison, traders will know whether their forex trading strategies are good enough, whether their trading target is high or low and whether they trade properly etc. Traders are able to accumulate trading experience by making their own forex trading plan.

What makes a good forex trading plan?

A good forex trading plan includes many things that can contribute to successful forex trading. The following are the critical elements of a good forex trading plan.

1. Proper trading goal A realistic trading goal is important in a proper forex trading plan. Trading without proper goal is like traveling without destination. Traders need to know how much they want to make in every trade. With such goal, they will do their best to trade properly in order to reach the goal.

2. Define the proper entry point Traders can also list their entry strategies in the forex trading plan after they make research on the market. With the entry strategies, they are more likely to find the best entry point and make more profit.

3. Determine how much to invest in every trade If the trading goal is the expected reward that traders want to get, the amount that they want to invest in a trade might be the biggest risk that they are willing to bear. Some forex traders are quite impulsive; they might invest more than they can afford to lose due to impulsion. Thus, listing the amount they want to invest in every trade is important and helpful for such traders.

4. Plan exit before entry. Exit strategy is also an indispensable element for a successful forex trading plan. Traders can set trailing stop order to help them exit trades without involvements of emotions.

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