To have a trading plan in Forex market is one of the most important elements in the puzzle

To have a trading plan in Forex market is one of the most important elements in the puzzle of becoming a consistently profitable trader. But for many it seems to be something of a kind of secret knowledge or ” maybe we should grab it here some day”.

Trading plan

With this way of thinking ends up the merchant in a trap without any output and lead their account to collapse. Success is a consequence of the discipline and most people have far too little. This is why it is so important to write down a plan that will serve as a guide and not allow you to go to the bottom for a constant pursuit of your goals.

Protect your account

To have a prepared and saved plan is also a proof that you’re trying to be a responsible person. This is an important success factor, because in this business you have to make difficult decisions. To keep this in mind, you need a trading plan, a list of procedures and rules that will always tell you what is best for you right now.

The more you try to fight the market, the more you risk. This is one of the biggest psychological paradoxes and hurdles that must be overcome as a trader before you learn to know your true potential as marknadstekniker. This fact has a direct impact on the assumption that patience in trading is rewarded by the market. When you trade with high efficiency you are of course convinced that you follow the right path.

Patience is very important

But I must warn you that efficiency may be good, but if you want to succeed, you must have patience. Initially, this may seem illogical, but to forget about this rule is one of the main reasons for the inconsistencies in the results and the experience of their boom cycles in order to restore his account. The psychology behind this process is related to the feeling of euphoria or the belief of their own skills that usually come with the traders, when they see that their efficiency is improved from day to day. In most cases, this is due to the behavior of a sufficiently longer time and consistency of use of the best signals, but when the emotions take over power, this can end up in a bad way.

The best remedy for emotional trading then becomes early detection of excessive euphoria or excessive faith in their own ability and the gradual silence and a short break from trading. There are many other methods that allow you to control yourself if the euphoria is trying to sabotage your success. If you feel that you just need to paste a patch in a visible location with a ”Beware of the euphoria after having won the transaction,” or ”You may win, but do not let your emotions twitch and have patience”.

The period after the closure of a profitable transaction or the entire series, is a time when you can clearly see the difference between an amateur and a professional. A professional is constantly in control of emotions and can objectively indicate whether they affect his actions on the market.

How to avoid excessive emotions?

One of the best ways to prevent emotional trading is to have your own plan with short tips that will tell you what you should do in a given situation in the market. Many traders do not even try to create such a plan because they don’t know how it should look like or how to get to it. It is important to note that the plan does not need to be too long or too complicated to be effective. The most important thing is to have a few guidelines written on the basis of which you will be able to be honest with yourself and be responsible for your own actions.

No one else is going to judge you and only you are responsible for your success or failure in trading. You can of course go to a fund in which your supervisor or another person controls your market, but most industries never reach that level because they can’t be responsible for themselves.

What is a good trading plan should contain – As I mentioned earlier, it need not be so complicated. The fact is that you have to force you in any way. Plan to hang near your trading post and you’ll read it every day. I used to write my plans in a notebook, but then was the notebook set aside and I ended up watching it. Do not make this mistake, do not use any portable computers. Write the plan, hang it on the wall, on the monitor, under the desk, on the fridge, anywhere, so that you DAILY see it and can read it.

What are the main elements in the action plan?

Define your positioning strategy. For example; you go into the market based on the Pin Bar setup according to the trend, or perhaps after the price has moved from the moving average? All signals that are used to define the opening of the position recorded in the plan. You must also know how to evaluate the opening of transactions in a particular place.
Identify the level of risk for the potential profit for each of the settings you will use to enter the market. Also, remember to adjust the object size in an appropriate way.
Adjust the positionsstorlek to the size of the Stop Loss, never the other way around.
Have a clear strategy to close the transaction before you open it. Even if you don’t use the settings with some RR-levels, remember that ”I think of it when I see how the situation develops” will never work. The time when you are most lenses are when you are out, so it is also the best time to plan for the entire transaction.
Planning should be a task for your behavior after the transaction, regardless of the outcome. When you see a gain or loss on your account, you are likely prone to excessive emotions. Frustration and disappointment can cause a desire to play as soon as possible and move to the next item. If you lose again and the cycle continues, it leads to yet more collapse.

It is also important for you to leave the market for a while in order to internally calm down because it is easy for you to fall in too much uncertainty in your skills or your clout over the market. There is a risk that the trader can sprout the idea to enter the market immediately with a new position – but this time, because it runs so good, it must be larger, which means more risk. The cycle repeats itself, until suddenly a failure, which in a moment ränsar a significant part of earlier gains, perhaps even all.

In this article I tried to demonstrate why you need a trading plan and gave some general ideas about the content. There are no strict rules for it, but the above 5 items together constitute the overall skeleton of a good plan and is a good starting point. You can add your one importance, according to your own common sense. Just remember, if the plan’s main objectives: It is to make you responsible and objective. You should never make new trading decisions if you are already on the market, in most cases, you will only lose. The best time to make a decision is when you don’t have any active transactions. Your plan should remind you and guide you so that you know what you should do in a given situation. This is the only effective way to consciously avoid emotional mistakes.

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