Forex trader's trading plan

Forex trader's trading plan

Forex trader's trading plan

In this most useful material, we will touch on the main thing that financial market participants do not perform for various reasons – the trader's trading plan.

Someone is too lazy to make it, and even more so to adhere to it, and someone does not know about it at all. A trading plan is often confused with the basic principles of a personal Forex trading strategy. In fact, these are completely different things. Below we will explain what a trader's trading plan is, what criteria it should consist of, and how to create a trader's trading plan yourself.

What is a trading plan for a trader?
The source that allows you to understand the market situation and make decisions easily is the trader's trading plan. In the absence of a trading plan, the Forex trader opens all trades at random. In other words, trading turns into roulette (lucky or not). We hope that the importance of using a trading plan in trading is now clear?

Every trader who considers himself a professional is required to keep 4 ""documents"" in which the trading plan will be thoroughly drawn up. What are these documents?

Trading strategy (trading rules).
Rules for entering a trade.
Money management.
Trading plan.
Let's look at each item in more detail.

Trading strategy (system)
how to create a trader's trading plan

The vehicle must have specific rules for entering and exiting the market. In particular, the following points should be clear::

currency pair;
trading time;
elements of market analysis;
other points related to opening and closing Forex orders.
Rules for entering a trade
Before the trader should always be a short list of conditions for the sale or purchase of an asset. It is better if this list is presented in electronic and written formats. A Forex trader should put pluses in front of each item when trading, if one or another item is fulfilled. When at least one of the conditions is not met, the transaction is not opened.

Money management
Having a proven trading strategy is half the battle. The main thing is not to forget about the laws of money management, as the preparation of a Forex trading plan will not work without it. It does not matter whether it is a percentage of the total Deposit, the number of lots multiplied by a certain value of the traded currency, or other ways to correctly calculate the size of the future order.

Trading plan
A trading plan can be safely called an action plan for any event that may occur during Forex trading. Usually, they try to include rules on money management and so on in the preparation of a Forex trading plan. This is all very well, of course, but a novice trader will only get confused in this regard.

Important points that a trader should include in their trading plan
Forex trading plan example

Every trader has their own plan, some have it, and others hear about it for the first time. However, let's look at examples of a Forex trading plan.

Important: the Forex trading plan needs to be customized, including specific items that need to be adjusted from time to time. This depends on the trading strategy, risk level, and money management.

1. Force majeure cases. The trader should have specific measures that need to be taken if the Internet, electricity, or computer breaks down. In case of such unforeseen circumstances, the laptop must have a charged battery, the smartphone or tablet must have a trading terminal installed in advance, a 3G modem, a VPS server, and the contact details of friends who will always help out.

2. Control profit and loss. Clearly, you need to write a plan of action as a result of a series of losing or profitable transactions. At this point, everything depends on the risks and trading style of the trader. Give some examples.

Example #1: I will stop my intraday trading after reaching 30 pips of profit. You do not need to consider these 30 points the goal of the day, consider it a profit limit.

Example #2: With 5 losing trades, I don't trade all week.

Example #3: Loss of 30% of the total Deposit – a break in trading for a whole month.

Example #4: Closed transactions that brought +10% of the Deposit in total, and this week trading is no longer conducted.

Example #5: when Trading one currency pair, I catch 3 stop losses, I will not trade any more on this day, and so on.

3. Strong emotional overexcitation.

Example #1: If I don't feel well, then I don't take up trading.

Example #2: When I'm depressed or sleepy, I can't access the terminal.

Example #3: Overexcited, very angry, difficult to concentrate on anything, nervous concussion – I will not trade on this day.

drawing up a Forex trading plan

4. Difficult trading tactics. If a trader uses several trading strategies, then you should record in writing where and when they are used.

Example #1: If there was a pronounced trend movement in the market, you need to use one strategy, and if there was a flat on Forex, then a completely different strategy.

Example #2: at the entry stage, I use an expert Advisor, then it is disabled, and then I use my own trading tactics.

5. News background.

Example #1: I Follow the news release in the corresponding economic calendar. During the release of important news, namely 30 minutes before and after their release, transactions are not opened. You should not trade at all if this day is the output of non-farm payrolls.

Example #2: before entering, I always check the chart for possible setups. I check my assumptions with Analytics. If there is a discrepancy, I will carefully double-check everything once again.

6. long-Term and short-term goals in trading. It is important not to forget about the set goals. Everyone has their own. You can aim to earn a Deposit of +30% per day, but if you set a goal of +10% per month, it will not seem unattainable.

Example #1: Don't chase huge profits. Be realists. 10% per month is quite an acceptable profit. There will be few deals, so most of them should be verified.

Example #2: I will not risk more than 1% of the Deposit for a single trade.

Example #3: I realize that by executing a trader's trading plan for every day, you can still suffer losses, so I put only the amount that I am not sorry to lose at my risk.

7. Its own feature. For example, it may be to enter the market to buy or sell, place stop orders and close the terminal, and then look at it only in the evening.

Sample of a trader's trading plan
So, making a Forex trading plan we discussed above, now we will show an example of a Forex trading plan of one of the traders, so that according to this sample You understand how to make a trading plan for Forex, so that trading is profitable.

Traded currency pairs: all major currency pairs are traded.

Working timeframe: M5.

How I conduct the analysis: the direction of currency pairs should coincide along the trend line on the charts D1, H4 and H1. When these conditions are met, I switch to the M5 timeframe and wait for the price to be in the same trend with the higher timeframes. Only when these conditions all match, I enter the market. It looks like this:

example of a trader's trading plan

Type of analysis: trade following the trend according to the moving average MA indicator.

Type of trading: scalping strategy.

Profit goals: I aim to close 10 points per trade. I try to make 20 profit points a day. After reaching the goal, I close the MT4 terminal and do other things.

How to manage risks: I set a goal to increase the initial Deposit by 120% per year at the rate of +10% per month. As soon as the goal is reached, the Deposit will be increased further. I do not put more than 1% of the total Deposit in one transaction. That is, if my Deposit is $1000, then the risk per order is $10.

Action plan in case of drawdown: if the Forex drawdown within the day is reached 2 times, I close the terminal and do not trade. I use non-trading time to work with errors (what was done wrong, etc.). If the losses continue for the next trading day (I catch 2 more stop losses), I close the terminal and do not trade for the entire current week. I start trading next week.

Every trader needs a Forex trading plan not only for a day, but also for a week or even a month. It is better if you keep it not only in electronic format, but also print it out on a piece of paper and put it in front of your eyes. In addition to the fact that it is necessary to make a Forex trading plan, you should also perform it.

We have reviewed an example of a Forex trading plan of one of the successful traders. They showed a sample of the trader's trading plan, as well as an example of goals for increasing the initial Deposit. It is important to keep a sample of the trader's trading plan in front of you at all times, so as not to deviate from it by a single step. After all, the trader's profit depends on it.

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