If you ever ask a Forex trader about his reason for choosing Forex trading over all other endeavors, most of them will tell that they found a way to remain independent by trading in Forex. They can adjust their work times and come up with their own ideas to implement and make a profit. However, most of these are just vacuum speech which they have learned for other traders or mentors, or brokers. We are not saying that you cannot find independence or that you have to depend on anything else while trading. What we are saying is that you can truly be independent when you understand the overall characteristics of the market and devise your own plan to deal with it.
Forex Trading Plan
To be your own trader, you shouldn’t follow the trading suggestions of others without contemplating on them thoroughly. Forex market plays differently for different traders. That’s why no single plan or strategy works forever or equally for every trader.
To taste real independence, you have to develop the ability to customize your own trading plan. Creating a plan and clinging to it are generally two major elements of a trading discipline. However, discipline is not always enough. Even concrete discipline is not always enough. Efficacy and discipline emerges from a follower’s indestructible concentration and will to stick with it.
What is a Trading Plan?
A trading plan is supposed to cover all the ins and outs of a trader’s journey in Forex. It features his personality, expectations, approaches, and risk management guidelines. It will help market participants limit their mistakes and minimize their losses. It also removes all kinds of elements that provoke an investor to go for making bad decisions at critical times.
For example, a person’s emotions confuse them when a lot of capital is on the line. When one’s mind cannot see a situation clearly, it makes an irrational decision and set the person for ultimate defeat. To avoid facing such problems, you need to know how to trade in Forex. Start with the basics so that you get a decent idea about the importance of having the right trading plan. This will definitely help you to manage your thoughts and plans in an organized way.
The most effective way to prevent the mind from doing something like that is to control thinking and guide it through a rational process set by an action plan for every potential market condition. With a proper guideline, every action gets inspected to make a person calm in the heat of the moment and to enable him to do the right thing.
Difference between a Trading System and a Trading Plan
Before we continue, we need to instantly distinguish the dissimilarities between a plan and a system.
A system only refers to how one can enter and exit contracts. It’s just a part of one’s plan like execution, analysis, risk management, and so on. As the market condition in Forex is always changing, a good trader will typically possess two or more trading systems.
However, a plan is more than just deciding how to and when to enter a trade. A comprehensive trading blueprint depicts all the importance and even all the unimportant aspects and factors that are part and govern the Forex market. Then a blueprint shows all the possible ways to deal with conditions that arise in the market. It works like a GPS system by letting a trader know about their current position and where he wants to go and how to reach there. Without having a plan, your trading will be like walking in a dark alley that directs to nowhere.
Without it, a trader has to depend solely on his luck and get contended with what his luck provides him with. They will find out where he is making things complicated and what things should be done differently in order to make more profit and prevent losses.
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