Friday, March 2, 2012

Following a trading plan

 Simple enough? Yes, it implicates plenty of hard work though... First, in order to follow your trading plan, you need to have one!!! So, if you don’t have a trading plan, this would be a good time to start writing one.
Now, see the questions above? You’ll need to address all of them (and more) on your trading plan:
How to determine which currency pairs to trade? This is not the entry signal; you need to address the conditions that need to be met in order to start looking for trade opportunities.
How to enter the market? This one is your entry signal, the indicator has to do this, or that, etc, price action, or a combination of them, etc.
How to exit the market? On both, when the market goes against you, and when the market moves on your favor?
How to handle each trade? This is known as trade management, are you going to add to your position, take partial profits or losses, and the conditions that have to be met in order to act.
Risk management? The methodology you are going to us to set your stop losses, are you going to trail your stop, etc.
How much to risk on each trade? Yep, this is capital management. i.e. I’m going to risk 1% of my account on each trade.
How to deal with fundamental announcements... are you going to leave your trades open during important announcements?
Weekends... are you going to close your trades before the market closes on Friday?
These are a few of the questions that you need to address in to create your trading plan. There are more but with the ones above you are going to have a nice start.
So please, create your trading plan, you need to know where you are going, all your trading actions need to target your main goal: follow your plan, only then, you’ll know you are doing things right.
            One more thing, it doesn’t matter what happens as long as you are following your trading plan, if doesn’t matter if the market goes against you, the only thing that matters is that you are following your trading plan, it’s the only way to achieve consistent results.

1 comment:

  1. Thanks for sharing your thoughts. I truly appreciate your efforts and I will be waiting for your next write
    ups thank you once again.

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