HOW DO I CREATE A TRADING PLAN?1)WHEN CONSTRUCTING A TRADING PLAN, ASK YOURSELF:
Without a plan and a rules-based approach to trading,
you are simply trading by the seat of your pants. It may seem
to work for a while, but self-doubt and/or greed will ultimately
get in the way of being successful.
A trading plan serves as a steady anchor in chaotic markets, helping
you forecast when to enter and exit the market. Best of all, it’s fairly
easy to create. The following steps may help you get started.
*Will I trade only one specific currency pair or many?
*Will I trade on a daily basis or hold my positions for days or longer?
*How much do I want to make?
*How much am I willing to lose per trade?
*If I trade on a daily basis, how many consecutive losses will I tolerate before I stop for the day?
*How will I analyze the markets? Will I look at news and other events? Will I examine charts and price movements?
*How will I use stops to control my risk?
*Will I have one profit target or multiple targets?
*What kind of profit can I reasonably expect to gain?
2)USING YOUR ANSWERS, WRITE OUT A
SHORT BUT DETAILED PLAN OF ACTION.
3)NOW, COMES THE HARDEST PART — STICKING
TO YOUR PLAN. TRY KEEPING A DIARY OF EVERY
ONE OF YOUR TRADES. IT WILL FORCE YOU TO
FOLLOW YOUR RULES AND AVOID IMPULSIVE
TRADING AS MUCH AS POSSIBLE.