Great post. Having a trading plan is very necessary to become a successful trader. Always learn forex before start and this knowledge will help you to get maximum profit in trading.
Some great points to consider here. I think many crucially slip up on the first part in deciding what time is right for them. Getting this wrong leads to unsustainable learning and practice which leads to unsustainable and inconsistent trading if it ever gets that far.
I don’t think the post reflects the way to BUILD a plan, but it is somewhat a way of thought of particular trader and in fact is missing the entry part. Yet it focuses on very strategy specific things like S/R, which can be totally ignored in some strategies. “Is my stoploss at BE?” does not sound like a plan, it is more like a fact, a statement when we are already IN trade. The proper questions would be “Will I move stop to BE in my trades at all?” “What needs to happen to move stop loss to BE?”. Similarily question “If there are any news?” this is absolutely irrelevant for non day traders, so why should be a part of universal building plan template?
For me each trading plan needs to have four pillars:
Entry - What I need to see, to open a trade? There are hundreds of strategies, so here maybe additional questions to narrow down.
Do I believe in Technical Analysis or am I 100% fundamental analyst?
Do I feel better with having low win rate with high risk/reward or very high win rate with low risk/reward?
How much time can I spend on trading? Can I sit in front of charts every day?
What will generate my profit? Strong trends? Reversals? High momentum (breakouts?)
What tools and why will I use? (chart patterns, S/R levels, fibonacci, indicators, EAs)
How I will calculate lot size to trade? Fixed? Based on Stop Loss?
Trade Management - What I will do when trade is open?
Will I move to BreakEven? If yes, when I will do this?
Will I add to winning/losing positions? If yes, how large positions and when?
Exit - How/when I will close the trade?
Will I set Stop Loss? If yes (most of us should), how I will calculate the Stop Loss level?
Will I close out trade manually or always wait for Stop Loss? If manually, when?
Will I set Take Profit level? If yes, how I will calculate it? Will I have multiple Take Profits?
Will I use Trailing Stop? If yes, when and where I will move it? Is it based on indicator (ATR, MA), profit amount (save 50% of profit) or will i move Stop Loss behind last large candle / SR level (strong supply/demand level)
Trading Plan Management
What metrics will I use to monitor the plan? (Win rate, R:R, Average G/L, Number of trades etc.)
What will I do when I divert from the plan?
What needs to happen to change the plan? What will make me say “OK, this does not work, we need to improve”?
Will I journal my trades? What data points I need to capture in journal?
Hi @fxonfire,
I think your high level plan is pretty good. I’d like to add that a strategy comes before a plan, and that strategy should be well thought through before a plan is even considered.
Strategy. What and why?
The “what” is "I am going to participate in Trading. What many newcomers fail to ask before they jump in is Why?
Of the thousands of pursuits that people can spend time and money on, why choose Forex?
Now I observe few “wealthy” people approaching Forex for the first time expecting it to be a solution to their financial problems, because by definition, if they are wealthy, they already have capital and most likely have a source of income that exceeds their outgoings (costs) so do not NEED to trade Forex.
But for the vast majority of newcomers to BabyPips, I could summarize their reason for becoming members is:
I am dissatisfied with my job
I need to earn more money than I earn right now
I need to get rich quickly
I strongly encourage newcomers to spend much time thinking about What and Why before jumping the gun and participating in Forex. But once they have made that decision to do so, they would do well to follow your high level plan.
Well, the routine that you’ve mentioned here may work. There are two things which should be noted: first of all, before opening the deal, one should have the idea of which profits to expect. So, opening a del should be a planned action. Secondly, it may turn out difficult for a newbie to follow these steps because of emotional aspect. Still, it looks simple when we look at it cold heartedly, but during the trading people are always full of emotions and they tend to omit this whole process of making decisions. That is why traders should train their psychology and discipline if they want to make decent and consistent profits.
