The amount of information available online about currency markets is nearly infinite. Parsing through this data to make intelligence decisions about when,what, and how much to trade can quickly become overwhelming. Profitable traders handle this information and make intelligent decisions by creating a trading plan that sets up a blue print of your goals and the tools you will use to reach those goals.
A trading plan should have three parts: What you want to accomplish, what tools you will use, and how you will use your tools to accomplish your goal. The first part should include goals and mindset. Goals should lay out what you want to achieve. There should be broad goals such as six month or one year profit goals, but there should also be short term goals such as setting a weekly lose to profit ratio. Mindset should be an overall snapshot of how your see yourself as a trader.
The Video Below will help to show you how to write one.
The second part of your plan should be the tools you will use to reach the goals you’ve set for yourself. These tools are anything you use to make your trades. This will typically include your broker, the trading platform, and the software you will use to track your trades.
Once you have decided on the tools you will use as trader it is time to determine how you will use these to reach your goals. This part of the plan determines how you will make decisions about when, what, and how much to buy and sell. Taylor your system to matches your goals and tools. Clearly lay out specific trading systems and strategies, as well as money management procedures. As you draft your plan use any documentation you have of previous trades to learn from your previous experience in determining what your strategy should be.
If you are a beginning trading or don’t have documentation then part of your plan should be a way to systemically record all your trades. This allows you to track the success of your trading plan and make changes as time progresses. Remember, a trading plan is for you. It is should help you organize information and make decisions, but it must also be flexible. If your plan is not working make adjustments. After your plan is complete it should be reviewed periodically to see how you performance against your goals.
A trading plan is a framework for success. It narrows your focus by labeling your goals, your tools, and your strategies. Then it provides a systematic way to check your success. It may seem that mere profitability is a proof enough of successful trading system but a clear, verifiable trading plans lets you know what is working and what is not working. Then you can eliminate unsuccessful trading techniques and strategies. Trading ceases to be a game and becomes a profession.
Winner’s Edge Trading, as seen on: