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Posted on Jan 18, 2016 at 07:29 PM
Every successful forex trader creates a trading plan that guides their trading activity
It is not by luck. No, it is not by chance that the consistently successful Forex traders smile to the bank year in year out, back to back.
If you ever wonder what it takes to also become a successful Forex trader in Nigeria, then the question you should be asking right now is “How do they (consistently successful traders) do it?”
It’s simple. The outstanding routine successful Forex traders go through at the start of every year (which many others don’t) is to develop a trading plan and keeping to it.
Most likely, you are yet to realize the full profit potential the Forex market poses on a daily basis.
Below, we’ll cover the entire checklist that makes an excellent Forex trading plan. This will guarantee you profitable trading in 2016. With this, you can grow to become a successful Forex trader or even a Forex fund manager in Nigeria
First, what is a Forex trading plan?
A trading plan is a specific, written down detail of what is to be done, when, and how. It puts in consideration your personal life situation and personality. Below are 6 items that should be included in your trading plan:
Trading Plan Checklist 1: Define Your Trading Edge:
Write down a list of what has consistently worked for you in the past. Ensure to list out ONLY the ones you are absolutely certain of. If you feel your list is bubbling up to over 20 criteria, you may find it difficult trying to respect all the rules. for instance:
Trading Plan Checklist 2: What is your life situation?
Your life situations are conditions peculiar to you and you alone. You should factor in the following when developing a trading plan:
Trading Plan Checklist 3: Be Your Own Trader
In other words: Don’t follow someone else’s trading advice blindly! Just because someone may be doing well with their method, it doesn’t mean it will work for you.
We’re all in different situations in life, and we all have different market views, thought processes, risk tolerance levels, and market experience. Have your own personalized forex trading plan and update it as you learn from the market.
Trading Plan Checklist 4: Define How Much Money to use per trade
Without money management, you will not stand a chance of making it in the business of trading. For me, the amount of money I can use per trade largely depends on how well I am performing. If I am going through a rough patch and my key performance indicators are down, then I use less money to minimize the damage to my account balance.
However, for keeping it simple in this article, I only use 10% of my available day trading buying power per trade. For example, if I have $250 cash, this would translate to $1000 in day trading buying power; hence, I would use $100 per trade.
Trading Plan Checklist 5: Evaluate every trade you place:
You should get a note pad to record every trade placed.
Trading Plan Checklist 6: Set Key Performance Metrics
Metrics are a set of laid down measures you will use to guage your performance in terms of meeting your set goals.
In Forex trading, there are lots of key performance metrics you can use to evaluate your trading plan. There is no global standard, in fact, your key performance metrics are developed based on your pattern trading style and forex trading goals.
If you don’t stick to your trading plan or you faltered in creating one, now is the best time to take stock of what you've done right or wrong and figure out how you can improve, because whatever you do, you don’t want to be sitting there in the same position a year from now; wondering where your trading went wrong and why you didn’t make any money this year.
In summary, you need to get a diary and detail out all the six items listed above well before you start placing trades. Don’t be lazy to do this, and even if you have already started trading, its not too late to create a Forex trading plan of your own.
For assistance, hit on our CONTACT US PAGE and request for an assistance with setting your trading plans.