How to develop a forex trading plan and strategy according to each trader
All day thousands of traders try their luck in the market hoping to obtain high profits quickly, however only a small percentage reaches succeed. Most end up failing and exiting the market because like everything in life, to be successful in trading is required of an appropriate work plan which should be based undoubtedly perseverance and discipline without which it is impossible that we have success as traders.
If we want to develop a trading plan that we find it useful should take into account the following aspects:
- First of all the first thing to do is inform us before we even make our first operation in the Forex or any other financial market. Proper preparation implicit documented through articles, books, reports and even consult experienced traders know. The Internet is a good source of information; in fact there are sites that provide valuable information. They can also take courses on the subject taught by experts.
- Research and learn about the different types of trading and strategies that exist to operate in the market. Before using these strategies with real money practice with them on demo accounts at least four months while the way the market works is customary. If you are using a new strategy with which no previous experience, it is important to back testing, through which you can check the performance that can provide the strategy by evaluating through the same historical data Mercado. As learn to use stop loss to avoid excessive losses in its operations which will also help to more adequately manage their capital. Study all the tools that can help you improve your PROBABILITIES of market success.
- Stay updated about the market, this is often very changeable as everything around us. It is therefore vital maintained properly informed about everything that happens in the marketplace every day so that we can properly react to the different conditions that may arise. Every day we find new opportunities and discover a new trading strategy that is more profitable than we currently use, a new indicator that gives us better market signals or more appropriate analysis tools. We must always leave room during the day to refresh our knowledge base on the market.
- Set a schedule from the start to operate in the market which must respect religiously, remember that discipline is the key to success in trading. It is important that we get used to operate at the same time every day. Expert’s traders recommend spend at least four hours a day to the market and whether in the morning, afternoon or evening should always operate at the same time as the way the market is changing behaves depending on the schedule due to sessions of the major financial markets worldwide. If a trader does not have a set schedule and is available every day at different times, you will not be able to develop a deep understanding of the market that may eventually lead you to failure. When we choose a specific time to run we must take into account that at that time there have been distractions to prevent us focus on our operations. A recommendation to determine what schedule is best for us to operate an account at different times and compare the results of each of these periods.
- Once it becomes operational, it is important to develop the habit of evaluating the results of your trading plan to determine the total number of operations and what is the percentage of winning trades and losing trades. This will allow you to establish what their shortcomings are as an operator so that never again make the same mistakes. You can also determine which strategies were actually beneficial and which on the contrary will cause more losses than gains.
- To analyze the market, operators typically use one of the following approaches: technical analysis and fundamental analysis. Traders tend to focus on one or other type of analysis, however in some cases operate combining both as a way to leverage the strengths of both and offset their weaknesses. Technical analysis uses charts, indicators, statistics and formulas of various types to determine points of entry and exit from the market. For his part, fundamental analysis is based on the study of economic news, financial, political, and social or other activities which may affect prices in the market character. Examples of indicators used in this approach are the interest rates of banks, employment levels, inflation, etc.
When designing your trading plan, the operator must choose which type of analysis used to study the market and make decisions. As mentioned above, some traders use both approaches quite successful, so it is a matter of the trader to employ the methodology with which you feel most comfortable.
The trader should adapt these recommendations to your personality and tastes so you feel comfortable to operate based on your trading plan. Each operator has goals, needs and different realities, making your trading plan must take into account all these aspects and be designed in such a way that could exploit the various opportunities presented by the market.
Now we have a clear idea of what a trading plan and its importance to the success of any operator, then a summary of the main parties must curbs:
Aspects which should include a good trading plan
- Trading plan objectives.
- Times in which we will operate.
- Trading strategies and types of analysis that we will use.
- Trading tools.
- Indicators that we will use to analyze the market.
- Evaluation of results.
If you want to succeed as a trader in the long term it is important to your trading plan in writing and follows it with discipline, because otherwise it would make sense processing. At first it may be difficult for our nature as human beings we tend to try to save steps and do things more hunches that through strict and elaborate plan properly. But if we get this our chances of profit certainly improve.
A written trading plan will prevent Let us drag by doubt and confusion result of stress and pressure that the market can cause us many times. Always have a copy of your plan and put it on par with your computer each time it is operating, so you can consult at any time.