The common problem that most forex traders deal with when first starting out is the lack of a proper trading plan.
Most traders don’t bother with a trading plan because they think it is going to be complicated. However, that is where they are wrong because building a winning trading plan is easier than you think.
Nothing in life arrives easily, and forex trading is the same. If you don’t have a clear trading plan or strategy, you will not achieve your desired results. As Benjamin Franklin said-
“Failing to plan is planning to fail.”
Granted that not many people believe in what Franklin said, but it does make sense, and experienced traders realize this. They know that if they want to earn money from trading in a Funded Traders Program, they will have to select one of these two choices:
The above may sound harsh, but it is the truth – that can be the end of the game. Diving into forex trading without a clear plan is like riding a bicycle without training wheels. Few traders realize the importance of a well-defined strategy. Some have a written investment or trading plan. However, experienced forex trades who are consistently earning money will agree that having a trading plan doesn’t guarantee success.
A trading plan is meant to act as a roadblock. It keeps you on track and from losing all your money. A lot of people think they are better traders than what they are, and this false sense of superiority in funded trader programs can prove to be fatal. If your trading plan lacks preparation or based on flawed techniques, you won’t achieve success instantly. However, what you will have is a detailed report that charts your failures. You can use this to identify your mistakes and correct them.
Documenting your progress in forex trading will help you avoid repeating costly mistakes and improve your strategic ideas. So, if you want to find success in forex trading, a winning trading plan is the best way to go about it. All traders must have their plan, which should account for personal trading goals and styles. You will not find success by using someone else’s trading plan or strategy because it doesn’t have any of your trading characteristics.
Treat your trading as a legitimate business. Respect it, treat it properly if you want to achieve success.
That sounds like a good plan but I am here to tell you that this can be a recipe for disaster. It may not be the exact trading plan that will bring you success.
The best way to create a winning trading plan is to ensure that you have all the essential components in place. Most traders have no idea what to do or how to begin. Fortunately for you, that is what you are going to learn today.
Before you begin trading –
Have a good idea of your trading skills.
Bear in mind that even the professionals find it tough to read the market correctly. If you are trading in the markets, you must be ready to give and take. The experienced forex portfolio managers are always prepared. They take profits from others who don’t have a clear set plan and throw their money away because of costly mistakes.
Be mentally prepared to deal with all the challenges that trading brings you.
Label these clearly before you begin to trade:
Your trading plan goals should be:
All forex portfolio managers are well organized and keep excellent records of all trades they make – winning and losing ones. It provides a reference point for future trades. So they know exactly what they did right and what mistakes they made.
You should write down important details like:
A lot of forex traders make the error of not paying attention to when they should exit the market. They are busy focusing2 on buying signals because they don’t want to sell if they are down, which would mean taking a loss.
Setting exit rules for the market is all well and good, but you must also create rules for entering the market. Some traders don’t do this and assume that exits are more important than entries. But even traders must know the best time to enter the market. It all depends on your trading style. Traders should set conditions for entering the market and ensure entering when the market is right.
Part of the reason computers are better at trading than people is that they don’t let emotions get in their way when trading. They look at the conditions, and if the market conditions are met, they will enter. Traders don’t do it like this, which complicates their trading and stops them from winning.
The best thing to do:
After every trading day:
A winning trading plan doesn’t always guarantee success. You may have a lucky phase also, but try not to let that get to your head by sticking to only what you think works for you.
The key to becoming successful in forex trading is being confident but also re-evaluating every trade! Eventually, you will develop enough skills that you don’t have to doubt your decisions or second guess when you are trading.
You can’t guarantee that a trade will make money because your chances of success hinge on your system of winning, losing, and your skill. It is important to remember that winning doesn’t come without losing, and professional traders only enter a trade when the odds are in their favor. The key to finding success as a trader is to cut your losses short and let your profits ride. You may lose a lot of trades, but if you don’t divert from your trading plan, you will find success as well.
Don’t give up!
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