Forex Trading Plan
Forex Trading Plan
Forex Trading Plan
Why Is Trading So Difficult for most people? This is the question that you need to ask yourself, well maybe you ask yourself, Why is trading so difficult for me? The answer is simple, its because you do not veiw Forex trading as a business.
Yes,trading is a business, it is not a get rich quick, however as my friend Bob Iaccino say's It can be a get rich quicker, when trading with a plan.(I love that line anbout trading Forex or any trading for that matter.) If you ask yourself some key questions you will be able to map out a plan for trading success.
Objectives:
First you must have objectives. You need to ask yourself, "What am I attempting to do in the trading arena?" "Am I a short term day trader, or do I want to take a longer term view and trade with the over all trend?" "Do I have enough Capital to trade this style? "How much am I attempting to make do?" " Do I want double digit returns?" "Can I sustain the draw-downs for this style of trading?" Once we answer these questions we need to move on to The next section.
Control:
It is very important to maintain control of yourself in trading. You are the most important factor in your trading success. So you need to ask yourself and write all this down please. "How will I control myself (Trading Discipline) when things go wrong in trading?" "Do I have defined rules in place to prevent me from financial ruin?" "What Are My rules?" "What is my escape plan?" You never want to be in the position of a pilot of a plane that finds he has both engines on fire and the parachutes were left at the laundry! Once we have those rules in place we need to know "How is this business going to be run?"
How Do I run My Trading Business?
Here are some of the key points you need to ask yourself about your trading business and have written down.
At this point we need to define whats our edge in trading? "How do I define a low risk Idea?
"What is the expectancy of this trading edge?" "Have we tested it with good Money Management?"
"Am I looking for clients money to trade with? " "Do I have a prospectus in place?"
"How will I execute my orders?"" Will I have an automated system in place to do that for me?"
The next part of the plan is Ongoing Research.
Ongoing Research:
"What is my back up plans?" "If things go wrong did I do the research and have a contingency plan in place?" Last but not least we need a disaster plan.
Disaster Plan for Trading Forex:
"How will I deal with a computer that goes down while my positions are open in the Forex market?" " Do I have a back up computer that is virus free just for trading ?" Do I have an emergency Air card that I can use if my ISP goes down as I am trading? " What happens If have a family emergency while trading Forex and I have open positions?" "Who will back me up?" These are all conditions that must be answered, you need to actually have a plan in place that you mentally review at least once a week. Why? Well, If any of these scenarios happen you will work smoothly through them.
Yes trading Forex is a business, a very big business. Lets go with the statistics, most businesses fail within 5 years (in Forex much less time) because they do not have a solid business plan. Most Traders have the same problem, they attempt to enter the market without a sound organized plan, don t let that happen to you. Plan you business, and trade your plan you will succeed!
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