I’ve recently started working for a company that is, I regret to say, very disorganized to say the least. Many of the company’s initiatives are hamstrung by various groups of people working against each other to promote confusion and delay. I’m reminded of some of the observations made by my old friend and former manager of mine from a past employer, whose name is Bill. Bill has always been one of my favorite sources of wisdom. I remember quite clearly one of his favorite refrains, “planned activities ensure predictable results”. There is truth in this, particularly when it comes to activities such as Forex trading. Crafting a trading plan, and, more importantly, abiding by the plans made, are hallmarks of a successful Forex trader. I’m going to repeat this, as I cannot over emphasize the importance of this idea: creating and following a trading plan is essential to successful trading.
So what exactly is a trading plan? Here are several key elements to successfully planning your trading activities
- Create a daily routine in support of your trading: do you wish to trade from the beginning of the New York session? Or perhaps London open? Make sure you are ready well in advance of your targeted trading session, with your charts open and ready for analysis. Treat this like any other job (because after all that’s what it is). Be focused. Be prepared. Be ready to expect the unexpected in terms of what the markets going to bring you each trading session.
- Create a strategy checklist: one of the major stumbling blocks, especially for new traders, his failure to follow strategies consistently and correctly. Variability in this discipline can cause all kinds of erratic results, from prematurely entering a trade and watching it go sour, to missing a good trading opportunity altogether. Having a checklist to ensure that you only enter trade when all the proper conditions for taking a trade have been met (and conversely not missing out on entering one when they have) will help you develop consistent habits that should keep your trading results within the predictable forecast outcome of the strategy you’re working with.
- Create a trading journal: keep track of your trades and write down what you’re doing. So why is this important? It’s important to the extent that this will not only help you keep track of what you’re doing as a trader, but as this becomes habit you will begin to digest various aspects of market behavior, which will go a long way in helping you to become better at forecasting and analyzing what the market is doing. Don’t merely write down the trade you take, but also record other aspects like news events, your feelings about where you think the markets are going, and so on. Over time you’ll be amazed how this will change your thinking and your perspective as a Forex trader.
- Always operate within the envelope of your designated risk: an essential part of any trading plan is proper money management. Don’t over trade, when your profit targets are met, exude your trade. When your stop loss is hit, don’t be discouraged, just turn the computer off, and be prepared for the next trading session.
- And the most important part of any trading plan – stick to the plan! The only thing more important than creating a plan is adhering to it faithfully. Don’t trade by the seat of your pants, and don’t be a gambler either. Successful Forex trading is not gambling, nor is it an exercise in shooting from the hip when you feel that the markets going to go this way or that. Be patient, only jump in a trade when all the elements on your strategy checklist have been made, record your trades along with other elements of market conditions, news, and so on, and then sit back and relax, knowing you’ve done a good job of being the best trader you can be.
Remember, that failing to plan is planning to fail. Nobody wants to fail. Maintaining good trading habits is a key element to success in this business. Like many other businesses, you’ll discover over time that what you get out of it is going to be directly proportional to what you put into it. The ideas I have shared today you will find, over time, will be personally beneficial to your growth and learning experience as a Forex trader. Another beneficial activity, particularly for new traders, is to get involved with a trading group, such as Slick Trade Academy. Apart from educational materials and tutorials, you’ll get access to a variety of trade signals and expert advisors (automated trading software bots) that will help you along your journey from newbie Forex trader to becoming a real pro! So why not sign up for Sapphire membership in Slick Trade? You’ll be glad you did!
That’s all for now – take care and have a great week! JC