Trading Plan + Trading Journal
Just as a good business plan is required when starting a new business, in order to trade successfully we want to plan and document our trades. Once you have decided on a trading plan, be disciplined. Don’t get tempted to stray from the original plan. The plan that a given trader uses, tells us a great deal about his character, expectations, risk management, and trading platform. A plan’s core is how and when to exit trades. Emotional action can cause damage.
Determining your goals is important. For example, how many pips or how much money do you plan to earn? Which point on the chart (value) do you expect the pair to reach?
For example: it would not be clever to set a short-term trade if you don’t have enough time during the day to sit in front of your screen.
Your plan is your compass, your satellite navigation system. 90% of online traders do not build a plan, and that, among other reasons, is why they do not succeed! Trading Forex is a marathon, not a sprint!
Remember: After putting your energy into the FX LEADERS FOREX TRADING COURSE you are ready to implement, but do not be smug! Let’s try to get into it gradually. Whether you wish to open a USD 10,000 or USD 50,000 account, we recommend you hold your horses. It is not advisable to invest all your capital in a single account or to take unnecessary risks.
Your trading plan has to include several items:
What is hot in the Forex market and other markets, such as commodities and indices markets? Be tuned in to the Financial markets forums and communities. Read what others write, follow current hot trends in the market and be aware of less fashionable opinions. Make FXLeaders.com your Forex opportunities window.
Follow the economic news, as well as general global news. You have already become aware that these have a tremendous impact on currencies.
Try to follow daily global commodity prices (gold or oil for example). They often have a large influence on some currencies, such as the USD for example and vice versa.
Follow FX Leaders forex signals, which at the very least give you an experienced opinion of what traders and analysts think of a forex pair at a certain time.
A trading journal is good for documenting your actions, thoughts, and comments. We obviously do not mean “Dear diary, I woke up this morning and felt marvelous!”… You will see that in the long run you will be able to learn a lot from it! For example- which indicators worked fine for you, what events to keep a distance from, market diagnoses, your favorite currencies, statistics, where have you gone wrong, and more…
An effective journal includes a number of points:
- The strategy behind each of your executions (How and why did you act that particular way?)
- How did the market respond?
- A sum of your feelings, doubts, and conclusions
In order to get things straight, we conclude the critical stages with a correct trading strategy:
- Deciding on a timeframe – What timeframes do you wish to work on? For example, daily charts are advised for fundamental analysis
- Deciding on the right indicators for identifying trends. For example, choosing 2 SMA lines (Simple Moving Averages): a 5 SMA and a 10 SMA, and then, waiting for them to intersect! Combining this indicator with Fibonacci or Bollinger Bands can be even better.
- Using indicators that confirm the trend – RSI, Stochastic or MACD.
- Deciding on how much money we are willing to risk losing. Setting Stop Losses is essential!
- Planning our entries and exits.
- Setting a list of iron rules for our position. For example:
- Go long if the 5 SMA line cuts the 10 SMA line upwards
- We go short if RSI goes lower than 50
- We exit trade when RSI crosses the “50” level back up