I am sitting down right now trying to pound out a trading plan. I have read everything on babypips.com
Does anyone know another website or something else that could help me learn more about making my trading plan?
forexfactory is another good forex site. But honestly, I recommend demoing a few of the posted strategies in the holy grail section. You can get a good feel for how a trading plan is constructed by trying out some already made ones.
This way you can see different points of few on trading.
I would suggest spending sometime googling Dr Alexander Elders and Van Tharp. I prefer Elders myself as he trades.
These two men has ideas on money management and position sizing which is a key element of your trading plan. It was often said that
a) Good trading plan with bad money management = failure
b) Marginal trading plan with good money management = success
c) Good trading plan with good money management = Flourish
d) BAD trading plan with good money management = success
item d) is very interesting, because Van tharp had a computer game that you can try on. It generates a chart of a random equities and you set your money management rule. I have tried it and no matter which equity, and whatever trading method, as long as MM rule is set right, profits are made.
For example, I would open a long position each turn irregardless of the chart position and forward it for 100 turn. So the program will close the long position if the price goes down and hit my MM rule, and will take profit if the price goes up and hit my MM rule (profit target). I could use the strategy of sell every day, buy every 3 day, sell every 5 days and so on, and each time it works…
The only DIFFERENCE is the time taken and the rate of return at the end of 100 turns. So basically Van Tharp theory is that MM plays a key role as above, then you find a good trading system, combine with good MM /position sizing and you will accelerate the time and rate of return.
Forex is like any other businesses that needs planning, in this case it’s trading plan. I agree that you can try out some forex strategies out there, but you must know what is the major trend and this is one of the most important part of the plan.
From there, we can look out for major support and resistance levels, check for any news release etc before starting to look for any trading signals. Money management is really an important factor in forex trading and I can’t stress that much enough. A good trading system can falter without a good money management rule. But an average trading system can make you success when there is a solid and consistent money management rule in place.
I have been looking at Van Tharp and I find his theories very interesting! The only problem is many off his services he offers are ridiculously expensive. Even the trading game you mentioned is 195$ past the first 3 levels! None the less I believe Van Tharp has alot to teach us about money management and I am going to research him further.
PS: everyone I made 30 pips yesterday and 40 pips today!!!
I suggest to just copy one that you like…no reason to reinvent the wheel…after you trade it for awhile, you will begin to tweak it to a way that suits you.