How To be a Successful Forex trader Segement 2
Have a Trade Plan
Although most traders figure out pretty early on that they need a trade plan. They don't always know how to formulate it or what should go into it. Although a Trade plan can be go very much in depth, I will discuss what, imho, are the most critical components:
First and foremost, it must fit YOU!! Any trade plan must fit how YOU want to trade as well as the time you have available to trade. when I first started trading, I wanted to be a scalper. However I had a day job which prevented me from trading the London and US sessions, so I had to trade the Asian Session, which is, for me anyway, not very conducive to scalping. So I developed a methodology that would trigger during the Asian session and usually hit it's profit target (or stop loss) during the London session. It was for the most part a set and forget strategy that I was comfortable with. I would urge any trader to find a methodology that they are comfortable and confident with and go from there.
Second, A trade plan must give you exit targets, both good (Profit target) and bad (stop loss). I put this ahead of Entries because, I believe it is more important to understand both the risk and reward of a trade BEFORE you are in it.
Third, Entry conditions, what ever your strategy is, you want to have a consistent way to trigger your trade.
Fourth, the trade plan has to be repeatable. When you get to point where your trading is boring, that's is when you will the most productive. For example, in the chart above I have my "Type 1" trade, which I absolutely love and that is what I look for. If you look at my past posts, you will see that there are a lot of them and they are, after awhile, boring except that they generate MONEY!!!
Fifth: Your trade plan should include a daily review. what worked?, what didn't? how can you improve? the illustration above is how I document my trades on a daily basis.
I hope this post is helpful.
In the next segment I will address back testing
Allen
Although most traders figure out pretty early on that they need a trade plan. They don't always know how to formulate it or what should go into it. Although a Trade plan can be go very much in depth, I will discuss what, imho, are the most critical components:
First and foremost, it must fit YOU!! Any trade plan must fit how YOU want to trade as well as the time you have available to trade. when I first started trading, I wanted to be a scalper. However I had a day job which prevented me from trading the London and US sessions, so I had to trade the Asian Session, which is, for me anyway, not very conducive to scalping. So I developed a methodology that would trigger during the Asian session and usually hit it's profit target (or stop loss) during the London session. It was for the most part a set and forget strategy that I was comfortable with. I would urge any trader to find a methodology that they are comfortable and confident with and go from there.
Second, A trade plan must give you exit targets, both good (Profit target) and bad (stop loss). I put this ahead of Entries because, I believe it is more important to understand both the risk and reward of a trade BEFORE you are in it.
Third, Entry conditions, what ever your strategy is, you want to have a consistent way to trigger your trade.
Fourth, the trade plan has to be repeatable. When you get to point where your trading is boring, that's is when you will the most productive. For example, in the chart above I have my "Type 1" trade, which I absolutely love and that is what I look for. If you look at my past posts, you will see that there are a lot of them and they are, after awhile, boring except that they generate MONEY!!!
Fifth: Your trade plan should include a daily review. what worked?, what didn't? how can you improve? the illustration above is how I document my trades on a daily basis.
I hope this post is helpful.
In the next segment I will address back testing
Allen