When we simplify, a trading plan acts like a template when you open a position on any forex chart. Think of it as a check list. This check list contains aspects of your analysis to open positions with a step-by-step system as your guide in trading. In the trading plan are also listed your short-term and long-term targets and contains a check list to achieve these targets.
The reason why you need a plan in forex trading is that you need assurance that when you open a position; The position you open is not based on emotion alone. Trading is a very emotion-intensive job, and if you do not follow an objectively arranged trading plan that contains the steps you should take while in the forex market, you will surely become a trader who always comply with his emotions, or in words Others, traders who always lose money.
The main advantage with designing a trading plan is that it can filter out the natural conditions and help you avoid opening positions when the situation is not conducive (based on your technique / analysis). This can naturally reduce your losing trade ratio and increase your winning trade percentage. Instead of being a Sniper, many traders apply scalping techniques even when they are not in the framework of scalping technique analysis (in intraday trading for example); And the reason they do so is that they do not have a plan, so the trading they do is based solely on mood or may pursue blind targets (without planning).
Sections of the Trading Plan at Forex
Start your trading plan with positive affirmation words;
State your short-term and long-term goals;
Determine the strategies you use and the strategic aspects you use in analyzing and when you open positions.
Determine your money management strategy, including things like risk / reward ratio, how your balance should be before you withdraw, how much money you withdraw, and so on;
Other sections, such as the pair you are entering, trading hours, news, notes about the phenomena you encounter, etc .;
Finally, end your trading plan and checklist with other positive affirmations.
The following is also an example for the reader's description:
Forex Trading Plan
"I will only open / close a position if conditions in the market match what I describe here, to keep me objective and consistent in making a profit." (Example of positive affirmations)
Target
Short term: At least have a profit of 1% of the initial capital amount each month.
Long term: Have an account with a balance of over $ 50,000 using strategies I trust, patience, and discipline.
Strategy (using the Price Action technique)
What pairs will I trade when I open the chart? Which markets are currently active?
Is the market condition now in Sideway? If so, close the chart; If not, continue to the next step.
Identify the levels where supply / resistance lies, and adjust to the trends on the chart. If the trend is bearish, focus on supply; If the trend is bullish, focus on the resistance.
Notice the candle patterns that are formed when the price approaches the levels identified in the previous step. When a signal is formed, proceed to the next step.
If I am in the chart with the H1 timeframe, then my risk-reward ratio = 1: 2, if at H4, 1: 3. Determine whether the signal that has formed has the ratio.
If appropriate, set the SL and TP positions, as well as the trailing profit. Make sure each position only uses 10% of the total initial capital. And make sure there are only 2 active positions open for each time. If there are 2 active positions, then the position to be opened only use 5% initial capital.
Close chart and continue other work
"Do not forget to be grateful for all the opportunities that have been given. Experience is the best teacher; But the experience of others is the best lesson. "
Above is an example of a forex trading plan I am compiling for the purposes of this article. Surely your plan will be complete and maybe a bit complex. However, try to arrange it as simple as possible so that you can follow the plan anytime, anywhere and in any mental condition.
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