HOW A FOREX TRADING PLAN CAN BOOST YOUR TRADING CAREER
The Forex market is another form of the foreign exchange market. It is the process of exchanging a currency into other currency for several reasons, might be for trading, or tour. According to some recent reports from the Bank for International institutes, the turnover of the Forex market is currently at more than $5.1 trillion.
In the next section, we will see the basics of the Forex market including the elements of it. Therefore, you would know how overall activity in this market occurs and how you can make a benefit from the foreign exchange market.
If you want to be successful in forex trading you have to plan for the future. If you decide to enter the forex market without preparation, it is very unlikely that you will be successful in the long run.
You have to learn what you are looking for Experts always emphasize the importance of Forex trading. It not for the new traders only but also for the advanced traders.
This article will help you to understand the importance of Forex trading so that you can use it properly.
What is Forex Trading Plan?
The Forex trading plan is not different from any other trading plan. We try to give you an outline of trading activities.
There will be some specific activities that you will follow. Once you have a proper guideline it will be easier to follow them and put them in your practical life.
A trading plan can help you to understand the market better and then you can apply it in your real life.
A proper trading plan can help you to manage your trading decision in a batter way. A proper trading plan can save you from silly mistakes and also help you to evaluate your gain and loss
Making a good forex Plan:
At the beginning developing a plan is very simple. The first step is to determine how frequently you want to trade and how many trades you want to open per week or par day. Then determine the duration of your trade.
This is very important, your plan should indicate the time dimension you are going to use on trading. If you want to be a day trader you should plan for 24 hours. If your position is near to a few days, it is better to have a plan for over a week.
Once you determine the day trading it is better to consider a day or a week as an aspect for your trading plan.
In a few cases, you have to use months which is very unlike. For example, assume that you are a day trader, So let’s consider the day a unit of our plan because most of the trader use the day as a unit.
Now add a few limitations to your trading plan. Take the number of winning trades and then multiply the amount to 1.2 which means if a trader performs 20 trades on a daily basis, on a day six traders are wining ones so a trader should not trade more than seven times a day.
What about less opportunity:
Normally when people hear about less opportunity it has a negative connotation. But it is not necessarily true when it comes to trading.
In order to understand the winning strategy, we have to understand each and every opportunity in the Forex market can bring profit and loss. Once you decide to limit your trading to set a par day trading, you have to focus more on trend following.
Every trade you put should be analyzed very closely because with every losing trade you will lose the opportunity to open a new trade which could have been winning one.
What about less opportunity:
Another important reason for limiting your trade is that people trade emotionally and lose their money but when the market is going up they do not have enough balance to trade. It is better not to invest all your money in one trade.
If you invest half of your money, you can trade again and compensate for the loss. This leads traders to sustain for a long time in the market.
How to Prepare Trading Plan in Forex:
We are trying to look at the importance of different time dimensions for a proper trading plan. How putting a limitation on your trade os vital. So let’s look at other time slots that will help you to have a plan for the Forex market.
Entry signals in Forex Trading:
Many beginner traders may have the same feeling with the ups and downs of the market price. You want to jump on something major is about to happen.
But suddenly you find yourself in an open position and you do not know what to do in that situation. This is a common problem with the beginner.
Every trading plan in the forex has a very clear description of entry signals which you are going to use on your trading strategy.
Once you properly jot down the signal, then your main work is to stick to the plan. Signals should be as descriptive as they can be.
Exit signals in Forex Business:
Every trader should have a clear understanding of their exit plan when it comes to learning how to prepare for a Forex trading signals professionally.
Opening a trade-in right time on the right tools is very essential. In some cases, it so happens that you close a trade in a decent way and after that, you lose a trade because you are not patient enough.
On the other hand, you might close a winning trade too early and then miss the full Profit you could achieve.
This happens because you did not have any exit plan. In order to make a proper plan, you should have a clear understanding of the profit and loss you could make in each trade.
Stop Loss and Take Profit:
As we have said every exit and entry signals are vital. These signals help you to understand how to trade using your strategy. The most important thing is, every trade should maintain a stop-loss and take-profit with it.
When you take your plan you should bear in mind that Stop Loss is very important than Take Profit.
As a professional trader, you should use stop-loss in every trade. You should not give any excuse while using the stop-loss.
What fault we make in Forex Trading Plans:
Most traders prefer setting up a trading plan which has to be solidified on paper. The plan should be very clear in your mind.
The trading is not a Shortcut or an instant guarantee for trading. In fact, it is simple that you do not follow the rule.
The main thing is the trading plan is theoretical in nature, they sound good on paper but it cannot be compared with the intense pressure of the market.
From the trader’s point of view step by step, the guideline is needed to cover the gap between the trading plan in theory and action. Use a proper demo account to develop your strategy.