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Why Do You Need A Forex Trading Plan?

2.80 star(s) 4 Votes

ShihTzu

New Member
Since the forex market is highly liquidated and quite volatile, there is a certain amount of risk involved. In order to overcome and control risk, a trader creates a trading plan which creates discipline and focus. Without a trading plan, it is unlikely to earn profit. No one has ever won a battle entering blindly. Same way, a good plan offers the trader reassurance.
 

lapidus

New Member
Markets are by definition volatile. There is little chance that you will be able to predict every move and react in the way needed. That’s why having a Forex trading plan is important. This plan will ensure when you trade, it is with purpose, rather than on a whim. A Forex trading plan takes the emotion out of price action trading, introducing discipline and a process designed to lessen the impact of mistakes.

Why do you need one?
Humans are emotional and prone to over-reacting to events. This lack of farsightedness, encourages traders to open positions which in the cold light of day they never would of. Some traders are more emotional than others. You can’t stop yourself from having emotions but you can reduce their impact. Reacting to events and letting emotions dictate your thought process is not a good combination!
This emotional approach to life makes humans poorly set up to trade. We are also easily distracted. We see a price drop and immediately assume it is a buying opportunity. Yet our first thought should be, does it fit into our own pre-established plan? A Forex trading plan ensures that if you follow its rules you will not let emotions get the better of you!
A Forex trading plan also helps stop mission creep from setting in. This occurs when your initial aim is met but you hang on longer in the hope of making even more. You usually end up losing it all in the process! That’s why creating a trading plan which has exit parameters is important, as it will help you trade successfully.


How do you create one?
Creating a Forex trading plan is not something which will happen overnight. It takes time. For traders learning to trade Forex, it is worth starting with a demo account before opening a live trading account, You can go to fxcashbackking.com to find the right broker for you. This will give you a chance to test your theories, make mistakes, discover what kind of trader you are and the strategy which works for you. Once you have worked out if you are a swing trader, scalper or prefer other day trading strategies, you can refine your trading plan. You may consider using candlestick patterns to help you.
There should be a healthy dose of reality in your Forex trading plan. For example, you should have worked out your objective. Are you looking for a 2/3% profit over minutes/hours, or are you looking for 10-15% over a couple of days? Working out what position size you should be taking for your strategy should be paramount. Taking small positions, such as 2/3% of your portfolio, is the name of the game. Understanding your weakness, and having exit strategies should also be part of your Forex trading plan.

Learn to adjust your Forex trading plan
Every Forex trading plan will have to evolve at times. As you develop as a trader, you will want to record your experiences to be able to go back and review where you can improve. You should not fear making mistakes, as these experiences will help you grow as a trader. Many aspiring traders will start by copying someone else’s Forex trading plan, strategy or ideas. There is nothing wrong with copying a winner, but evolving that plan into one which fits your trading style will ensure you trade profitably regularly.

What is your risk tolerance?
When creating a Forex trading plan, you will need to decide what level of risk you are prepared to take. Your ability to stomach risk will be dependent on how much you can financially lose, and how much your emotions can handle losing. This will be different for each trader. Creating a risk management plan with rules to encourage you to step away when you’re having a bad day will keep you fighting for another day! This can be as little as 1% loss per day for some and 10% loss per day for others. Separately a risk-based approach, where you prioritise risk management over trading profits can also help.
Conclusion
Entering the trading arena without a Forex trading plan is foolhardy. In life there are winners and losers. Winners lose all the time but learn from these mistakes to create a trading plan which evolves with their experiences. Losers never learn and keep losing. Which are you? You will lose money on trades but you will also have profitable trades. In time your Forex trading plan will help you reduce the former and increase the latter. Developing a Forex trading plan will help turn you into a consistently profitable trader.
this article helps a lot ,really apprecisted
 

HeavLeighGill

New Member
If you trade without a plan, how are you supposed to figure out what is and isn't working? You would basically be trading blindly and may get lucky from time to time, but you'd wind up losing money the majority of the time.
 

Remiform

New Member
The need for a plan is directly proportional to profits. To trade in the right direction with minimum losses and risks, we need a full proof plan that must include risk management strategies.
 

Walter

New Member
In every business you need a Plan , expecially in forex where you can know exclty your entry and exit point!
 

cashisking86

New Member
A simple way to look at it in my opinion is that forex is a business. A $6tn a day business at that. You wouldn't enter into a business venture without a plan so why on earth would you in forex?
 

weskusklong

New Member
Markets are by definition volatile. There is little chance that you will be able to predict every move and react in the way needed. That’s why having a Forex trading plan is important. This plan will ensure when you trade, it is with purpose, rather than on a whim. A Forex trading plan takes the emotion out of price action trading, introducing discipline and a process designed to lessen the impact of mistakes.

Why do you need one?
Humans are emotional and prone to over-reacting to events. This lack of farsightedness, encourages traders to open positions which in the cold light of day they never would of. Some traders are more emotional than others. You can’t stop yourself from having emotions but you can reduce their impact. Reacting to events and letting emotions dictate your thought process is not a good combination!
This emotional approach to life makes humans poorly set up to trade. We are also easily distracted. We see a price drop and immediately assume it is a buying opportunity. Yet our first thought should be, does it fit into our own pre-established plan? A Forex trading plan ensures that if you follow its rules you will not let emotions get the better of you!
A Forex trading plan also helps stop mission creep from setting in. This occurs when your initial aim is met but you hang on longer in the hope of making even more. You usually end up losing it all in the process! That’s why creating a trading plan which has exit parameters is important, as it will help you trade successfully.


How do you create one?
Creating a Forex trading plan is not something which will happen overnight. It takes time. For traders learning to trade Forex, it is worth starting with a demo account before opening a live trading account, You can go to fxcashbackking.com to find the right broker for you. This will give you a chance to test your theories, make mistakes, discover what kind of trader you are and the strategy which works for you. Once you have worked out if you are a swing trader, scalper or prefer other day trading strategies, you can refine your trading plan. You may consider using candlestick patterns to help you.
There should be a healthy dose of reality in your Forex trading plan. For example, you should have worked out your objective. Are you looking for a 2/3% profit over minutes/hours, or are you looking for 10-15% over a couple of days? Working out what position size you should be taking for your strategy should be paramount. Taking small positions, such as 2/3% of your portfolio, is the name of the game. Understanding your weakness, and having exit strategies should also be part of your Forex trading plan.

Learn to adjust your Forex trading plan
Every Forex trading plan will have to evolve at times. As you develop as a trader, you will want to record your experiences to be able to go back and review where you can improve. You should not fear making mistakes, as these experiences will help you grow as a trader. Many aspiring traders will start by copying someone else’s Forex trading plan, strategy or ideas. There is nothing wrong with copying a winner, but evolving that plan into one which fits your trading style will ensure you trade profitably regularly.

What is your risk tolerance?
When creating a Forex trading plan, you will need to decide what level of risk you are prepared to take. Your ability to stomach risk will be dependent on how much you can financially lose, and how much your emotions can handle losing. This will be different for each trader. Creating a risk management plan with rules to encourage you to step away when you’re having a bad day will keep you fighting for another day! This can be as little as 1% loss per day for some and 10% loss per day for others. Separately a risk-based approach, where you prioritise risk management over trading profits can also help.
Conclusion
Entering the trading arena without a Forex trading plan is foolhardy. In life there are winners and losers. Winners lose all the time but learn from these mistakes to create a trading plan which evolves with their experiences. Losers never learn and keep losing. Which are you? You will lose money on trades but you will also have profitable trades. In time your Forex trading plan will help you reduce the former and increase the latter. Developing a Forex trading plan will help turn you into a consistently profitable trader.
This is great information, thanks for sharing.
 

Pediment

New Member
Planning is very necessary before every action. In forex trading, we have to take into account many factors to make profits, so having a concrete plan would help us to trade in the right direction with minimum risks.
 

Cervicorn

New Member
Plans are essential in the forex trading market for profitable trades. Without a proper trading plan you can never understand the market properly and miss out on the opportunities. Also, plans help you to manage your emotions and be rational while trading. Not only do you need a good strategic plan but you must follow them consistently as well.
 

Bane

New Member
Very informative post indeed. All the points covered are accurate and to the point. Indeed a trading plan is very important for traders as they help to calculate risks and also help in making other decisions as well. However, sticking to a certain plan is difficult but you must control your emotions and remain consistent.
 

Glenoid

New Member
No trader can be successful in trading without a trading strategy. A solid trading strategy guarantees that you take the necessary precautions to reduce your risk. To trade with comfort, your trading strategy should be adaptable.
 

Aerogenesis

New Member
Success needs a plan. If you want to do forex trading successfully, then you will also need a plan to execute and achieve the desired results. Do not forget that the foreign exchange market is highly volatile and risky. Blindly putting your money into the market and expecting a profit is nothing more than a daydream.
 

c4t

New Member
discipline is needed for success in forex as forex market has inherent uncertainties.Trading plan ensures that
 

fxpro007

New Member
A good trading plan is always necessary. This will allow you to remain composed and less emotional throughout your trades, as you have already created a plan that will guide your decisions.
 

AlexisTaylor

New Member
Markets are by definition volatile. There is little chance that you will be able to predict every move and react in the way needed. That’s why having a Forex trading plan is important. This plan will ensure when you trade, it is with purpose, rather than on a whim. A Forex trading plan takes the emotion out of price action trading, introducing discipline and a process designed to lessen the impact of mistakes.

Why do you need one?
Humans are emotional and prone to over-reacting to events. This lack of farsightedness, encourages traders to open positions which in the cold light of day they never would of. Some traders are more emotional than others. You can’t stop yourself from having emotions but you can reduce their impact. Reacting to events and letting emotions dictate your thought process is not a good combination!
This emotional approach to life makes humans poorly set up to trade. We are also easily distracted. We see a price drop and immediately assume it is a buying opportunity. Yet our first thought should be, does it fit into our own pre-established plan? A Forex trading plan ensures that if you follow its rules you will not let emotions get the better of you!
A Forex trading plan also helps stop mission creep from setting in. This occurs when your initial aim is met but you hang on longer in the hope of making even more. You usually end up losing it all in the process! That’s why creating a trading plan which has exit parameters is important, as it will help you trade successfully.


How do you create one?
Creating a Forex trading plan is not something which will happen overnight. It takes time. For traders learning to trade Forex, it is worth starting with a demo account before opening a live trading account, You can go to fxcashbackking.com to find the right broker for you. This will give you a chance to test your theories, make mistakes, discover what kind of trader you are and the strategy which works for you. Once you have worked out if you are a swing trader, scalper or prefer other day trading strategies, you can refine your trading plan. You may consider using candlestick patterns to help you.
There should be a healthy dose of reality in your Forex trading plan. For example, you should have worked out your objective. Are you looking for a 2/3% profit over minutes/hours, or are you looking for 10-15% over a couple of days? Working out what position size you should be taking for your strategy should be paramount. Taking small positions, such as 2/3% of your portfolio, is the name of the game. Understanding your weakness, and having exit strategies should also be part of your Forex trading plan.

Learn to adjust your Forex trading plan
Every Forex trading plan will have to evolve at times. As you develop as a trader, you will want to record your experiences to be able to go back and review where you can improve. You should not fear making mistakes, as these experiences will help you grow as a trader. Many aspiring traders will start by copying someone else’s Forex trading plan, strategy or ideas. There is nothing wrong with copying a winner, but evolving that plan into one which fits your trading style will ensure you trade profitably regularly.

What is your risk tolerance?
When creating a Forex trading plan, you will need to decide what level of risk you are prepared to take. Your ability to stomach risk will be dependent on how much you can financially lose, and how much your emotions can handle losing. This will be different for each trader. Creating a risk management plan with rules to encourage you to step away when you’re having a bad day will keep you fighting for another day! This can be as little as 1% loss per day for some and 10% loss per day for others. Separately a risk-based approach, where you prioritise risk management over trading profits can also help.
Conclusion
Entering the trading arena without a Forex trading plan is foolhardy. In life there are winners and losers. Winners lose all the time but learn from these mistakes to create a trading plan which evolves with their experiences. Losers never learn and keep losing. Which are you? You will lose money on trades but you will also have profitable trades. In time your Forex trading plan will help you reduce the former and increase the latter. Developing a Forex trading plan will help turn you into a consistently profitable trader.
A trading plan, a goog one, os the besta traders´s tool
 

Tempera

New Member
Trading plans pave the way to a profitable trading career. It is like a guide that helps you make decisions wisely. You need to develop a strategic and flexible plan for a simpler trading. Trading plans will always show you the right direction and keep you away from distractions.
 

pippin

Member
I follow trading plan to not let my emotions ruin my trading. If I make mistakes I also make sure this didn't turn into a snowball due to the strong urge to revenge market. Mistakes is a part of trading but another important mistake is an attempt to pay too high price to fix them by going into overtrading.
 
Without a trading plan, you will have no idea about where to start and where to stop. A trading plan allows you to take control over your trading and not let the market control you.When you have a detailed trading plan in place, you are less likely to deviate from it. Sticking to your trading plan will help reduce the stress of trading and help you maintain your risk exposure.
 

Odis1942

Member
Trading without a strategy is equivalent to trading at random, which is not productive. Whether or not you have several good plans related to your pairs, trade timings, trading strategy, trading volume, daily target, what to do if you carry loss, the best way to exchange in emotions when trading, and so on, you will discover additional prospects of your trades as you trade in a properly organized manner.
 

Serimeter

Member
In order to stay on track and achieve your trading goals, a trading strategy can be extremely beneficial. As a trader, having a plan in place can help you stay disciplined. Improve your strategy, manage your emotions and trade more frequently with a sound mind.
 

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