FOREX TOP TIP – PLAN THE TRADE AND TRADE THE PLAN

by Michael on September 1, 2011

One difference between a professional trader and an amateur is the TRADING PLAN. In a nutshell amateurs don’t have one.

To WIN AT THE FOREX you must know before placing the trade, not only your desired entry point but also what you are trying to gain in terms of the number of pips. You must also have your stop loss level predetermined and preferably entered the moment you have made the trade.

When you do not have a trading plan it is very easy to let your small losses build into large losses. Without a plan your emotions will get in the way, confusion will cloud your mind and before you know it your account will be down. At this point you will try and think you are cleverer than millions of would-be Forex traders before you and that you can trade your way out of the situation by letting the losses run and praying for a turnaround, or worse you start doubling up (betting against the trend).

 Planning the trade and trading the plan is a pre-requisite of a successful trader. It will mean you have unwavering discipline, you have mastered money and risk management. Even with a win success rate of just 50% you can earn a substantial income by letting your profits run and cutting your losses short.

A good technique is to write down a set of rules with a clear explanation of the techniques and indicators you use. Put them next to your computer. Write them so an idiot could follow them. At the end of the day review your trades and analyse whether you followed them and whether they were successful. It may need changing but try to avoid over-complication.

Good luck in your trading and your plan. Keep it simple and trade it consistently every day.

Michael.

 

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