I have been trading FX now for the past 6 months with no specific direction. I am keen to write a trading plan which I can commit to but wonder if anyone has any tips on how to go about doing this. If some of the more experienced members of the Babypips community could help advise i would be grateful to hear your thoughts.
Start with a simple trade idea. Backtest and foreword test. Start off with a 1:1 risk to reward and shoot for ATR. Keep good records of the trades. After several trades see if moving stops to give you better risk to reward would have made the trades you’ve tested more profitable. Repeat over and over again. Keep tweaking. It’s alot of work.
An effective trading plan is: 1.Written, 2. Followed. 3. Only changed when facts call for it
I like to start with questions based on what I’m trying to accomplish as a trader. 2. How I’m hoping to get there. No different than if you were going to take a trip. You start with where you are now, where you want to get to and how are you going to get there. Like a map it needs to be written that way you can read it every day BEFORE you start trading and when you finish trading you can Write down would you did right and what you did wrong this will help you to not only hard, but will help you to work smart. Also a written review helps you to make the same mistake the least amount of times possible. After that comes the hardest part: Patience. Just6 like taking a trip you can run into delays, construction, weather. You need to give your plan time to work.
Goals
What are you trying to accomplish as a trader. The more specific the better.
Trade Method. If what you are doing for the last 6 months is working more times than not, Keep doing what you are doing over the past 6 months if not look for another plan.
Give your plan time to work. All trading methods work some time; no method works all the time. The mo0st important thing is always protect your trading bank roll.
Hope that helps
Gp
What are the components of a trading plan that people may utilize? I haven’t started building my own plan yet, but imagine components may be things like:
Objective/Goal
Target Markets
Research and Fundamentals
Charts and Time Periods (Daily, Hourly, etc.)
Technical Analysis/Strategy
Rules and Guiding Principles
I’d love to hear from other people how they crafted their plans. Especially stories of people who started fresh (green, newbie) and have developed a successful plan.
To start with no strategy is not very smart. Trading always involves risk, so you need to be ready and prepared. I would recommend starting simply from the daily plans and summaries. This will help you to understand your performance and create some long-lasting goals.