Nothing can be accomplished without norms and standards. Forex trading planmade by forex traders are norms and standards in forex trading. It is not difficult to understand why forex traders need to formulate forex trading plan. Most people who lose in forex trading are those who fail to set disciplines and make plans for themselves. Forex trading plan is just like GPS, it will take you whenever you want and if you get lost in forex trading, the GPS will direct you to the right direction.
How to make a forex trading plan? The content of forex trading plan may differ greatly because of different fund amount forex traders have and personal character etc. some prudent traders may choose to exit the market when they get a small amount of profit while some may decide to wait for a higher profit. But generally, forex trading plan are made according to the following three aspects: entry and exit plan, money management plan and emotional plan. I will explain them one by one as follows:
Entry and exit plan contains the exact description of the conditions for the trade entries and trade exits. For example, forex trader will withdraw capital from the market if he gets 2000$ profit in the forex trading plan. Making the entry and exit plan need some forex analysis on the market trend. But observing the plan is the most difficult part because forex traders intend to expect higher potential profit.
Money management refers to such things as how much money forex traders should invest and how much they should reserve in their account. If they get some profit, how much they should recoup for previous losses and how much to invest in the later forex trading. Generally, it is advised that forex traders invest a small percentage of their money in forex trading. Thus forex traders had better determine a specific percentage in forex trading plan and execute the forex trading plan no matter what happens.
Emotional plan is the most difficult part to observe in a forex trading plan. It contains the instructions for tracking emotional involvement of the trader in the trading process and the methods for controlling it. For example, in a forex trading plan, forex traders planned to leave the market when making 5000$ profit. But when other traders think that the market will continue to go upwards and they are not going to leave the market, the forex trading plan maker tends to follow suit. So once making a forex trading plan, just follow it and refrain from being controlled by emotion.
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