Prepare a plan for trading the currency market
A plan or trading strategy is essential to stand out on Forex. One study reported that only 10 % of traders earn more on their positions and they lose , because they apply a consistent trading plan . Novice traders should understand the benefits of the plan to avoid taking positions and ruin on a whim.
Presentation plans trading
Before considering the various types of plans commonly used in Forex , you must first understand what the trading plan.
What is a trading plan ?
The trading plan is a series of rules that determine the reactions of the trader before its graph. It prevents it from getting lost in conjectures in the analysis and helps to strengthen its position and make the right decisions. This is essential insofar as trading errors are common on the web. These errors lead some traders to make decisions in the euphoria or fear , decisions that ultimately ruin . A good trading plan includes 5 or 6 steps and adapts to the needs of the trader.
Types of trading plans
The plan is to focus on the results of a specific analysis and trader based on these results. Thus, the trader can move the market by focusing :
differences in exchange rates ,
Fibonacci levels ,
crosses indicators ,
pivot points ,
and share prices .
These plans include graphical data analysis and the use of mathematical tools. Associated with serious money management , they are essential to the success of a Forex trader .
The steps of a good trading plan
An effective trading plan includes at least 5 steps. Each must be respected to the letter and left when she was successful .
The early stages of a trading plan effective
A good trading plan starts with choosing graphics adapted to the situation of the trader. The day traders opt for such graphs 5, 15 and 60 minutes. These graphics are essential when keeping its trade positions for a few hours , what are the majority of traders. Then , it must point supports and resistances on the longest chart ( 60 minutes) , since they indicate the general trend of progress. The third step is to position itself in the direction of the longer trend. For example, if the trend is down on the 60 minute chart , but up on the 5 minutes it would be a mistake to enter the market. We must wait a further drop down to place his orders.
Identify the signals and exit the market
Most traders do not discern the signals that tell them they must enter or exit the market. A good trading plan takes into account the important signals. For this, the trader must use technical tools . The most common are moving averages, trading channels and outputs triangles. These mathematical indicators and own intuition trader may indicate that it is time to place an order or leave the market.
In principle, traders should set a bar from which they close their positions, while increasing the gains and minimizing losses. Some choose to do so under the following conditions :
when gains or losses reached a predetermined fixed threshold,
when technical information exchange gives market
gains when reached a threshold , but there is no loss .
Close positions and exit the market involves some risk , and the risk is dependent on the timeframe ( trading period ) chosen by the trader. It is better to place stop loss orders to a certain threshold and leave the market when this threshold is reached , even if we won a lot of money .
Test your trading plan before use
Should be tested strategy implementation and ensure that it is effective before using . Some traders automate their trading plan by creating an Expert Advisor that shows flaws in the system they have in place. Novice traders could start by testing their plans for trading on a demo account . Based on the results obtained, they make improvements before using real money in Forex.