Importance of Forex Trading Plan
A trading plan is a complete guide to what a trader will do in the market. This plan should include clear rules for entering and exiting the market, financial management rules, as well as outlining time frames, and trading instruments.
Keeping a trading journal is mandatory before changing trading sessions. This is not only useful for analysis, traders also need to apply this daily journal as it becomes the core of the trading plan. Traders will know the dynamics of the ever-changing market through the results of the analysis that is routinely made. If disciplined traders get used to doing daily analysis, their trading will be better.
The most important thing to consider in preparing a trading plan.
1. Determine the strategy for entry. Determine the best way or technique from your own experience in opening positions in various market conditions. Of course, there are lots of entry techniques used by traders, just choose one. If it has been determined, then keep in mind that this entry technique is the best for certain market conditions. The thing to note is to know market conditions, it requires separate flight hours.
2. Determine the risk/reward ratio. This risk management scenario must be applied to every open position. Make sure the sizing parameter is in accordance with the available balance
3. Set a stop loss target. Sounds very trivial to determine this stop loss position. But the conditions will be different if our position has been floating quite a lot. Therefore, before opening a position, first determine the stop loss that we will agree on. Mistakes in determining stop loss positions can result in the account becoming MC.
4. Determine the exit or take profit strategy. The exit target must also be determined before positioning according to the desired reward. Do not determine the exit level while the trade is in progress, because it will involve emotions in deciding it. Determining the exit position before making a trade will be more objective than determining it after making a trade.
5. Keep journals and notes for evaluation. Every position that has been closed, whether it produces profit or loss, is recorded in the journal. Making this journal serves to evaluate the trading plan that we have created and run. Make improvements if the journal contains deficiencies in our trading plan. Likewise, if we find advantages we can maintain or increase these advantages.
Note:
Comments
Post a Comment