Your Trading Plan (learn to trade forex)

To be a successful trader, we must have some element in our self. This element should be around trading objective, personality and starting capital.All of these element will reflect yourself while trading.

How to constructing and implementing your trading plan??


Do Your Homework

It is first essential to learn to trade forex, we should learn the basics, how and why markets move and research a method that you are comfortable with to trade: i.e. one that is based on sound methodology, and one you can trade with confidence, and discipline. So before you starts to trade make sure you have good background knowledge on all aspects of trading. You would not try and fly without lessons, and the same is true of trading currencies. If you trade and “shoot from the hip”, or on tips from friends, and stories in the financial press, you are almost certainly going to end up a loser over time.

Match Your Method to Your Personality

Should be one you have decided you have confidence in and can implement with discipline. This may sound obvious, but many traders trade in a way that is totally opposed to their personality. For example, if you are impatient and hate giving back any profits then a long term trend following system is not for you; you would probably be better suited to a shorter term swing trading method.


Begin With A Simple Method

One fact that remains true is that simple systems work best for most traders. There is no link between the complexity of a method and how successful it is. Another advantage of simple systems is they are easy to understand and implement and this helps you stay disciplined in the face of the inevitable run of losing trades.


Begin With Sufficient Capital, Trade Small Positions And Diversify

The Utopians dream is to start trading with a small amount of money and make it into a fortune in a few months. The reality is this is unlikely to happen to the majority who trade. The first thing to do when trading is start with enough capital to take a string of losses. The simple fact is: the less you start with the lower your odds of success. It’s a matter of logic. If you are hoping to get on board one big move, it may take ten consecutive losses before the winner comes. By then your capital could easily be depleted and the move you were hoping for comes without you being able to participate. Always start with enough capital to allow you to take a few losses. If you can you should hold a few trades in different areas to diversify your positions ie “don’t put all your eggs in one basket” and blow your money in one trade. To start with keep your position size small and spread the risk.

Make Objectives Realistic

What is realistic amount of profit to aim for annually on your starting capital? Many investors when asked this question simply say as much as possible. They have not sat down and thought about it, they simply have read stories of the minority who have made it big and want to do the same. The fact is that most traders’ start with unrealistic expectations and this leads them in to a false sense of security. They ignore the risks of trading; they concentrate too much in one trade and risk too much and end up losing. So what is realistic? Any trader who can achieve growth rates compounded of 30% + per annum is doing very well. Generally, a compound growth of 30 - 50% per annum would place you in the top 10% of traders that make money and this is a realistic goal if you do your homework.

Be Independent And Isolate Yourself

Emotions are your enemy when trading so it is important to be independent and follow your own path. It may sound lonely relying on yourself and is in fact uncomfortable to many but as time goes on your own opinion is just as valuable, perhaps more so than any others, experts or novice traders.

Don’t Lose Sight Of Your Ultimate Goal:

The ultimate goal of trading is to make money. There is no goal greater than this in trading. Though there are other benefits to trading self-satisfaction, competitiveness and the actual thrill, these are all secondary. If you seek revenge against the markets,other traders or merely want to compete for the sake of it, then the primary goal of speculating will be lost and so will your money.

~learn to trade forex~

Digg this