Feb 13, 2019

Create forex trading plan

Create forex trading plan

Creating a trading plan is essential for long-term currency trading success. In addition, it is created with just a few extra steps and gives the dealer the opportunity to significantly improve his performance.

What is a trading plan?
Being an independent trader should be the goal of every forex trader. Each trader has different thought processes, market insights, risk tolerances and market experience. A method that works for another trader and meets all his needs does not have to be suitable for another trader. On the contrary, it could even be detrimental to him.

A trading plan defines when, what, why and how to do it. He is a mirror of personality, expectations, trading systems and principles of risk management. Together with a bit of discipline, he can ensure that profits can be significantly increased and, above all, enables regular evaluation and thus targeted and strategic improvement.

A trading plan is also necessary because the currency trading can be linked to many emotions. This applies both when trades are successful and when the trader has to accept losses. Every trade has an impact on the psyche and favors wrong decisions from the heat of the moment. The best way to prevent this is not having to think. Anyone who has already prepared in advance what he will do in this case will think less about his decision while he is in an emotional state and instead continue to act with a cool head. Short-circuit actions are thus avoided.

A trading system simply indicates when and how a trader opens and closes positions. On the other hand, a trading plan also includes the trading system but everything a trader needs to make meaningful trading decisions - optimally at any time. This means that the analysis, risk management, execution, etc. are all covered by the trading plan.

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