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How To Develop A Successful Forex Trading Plan? Part 2

Once you start trading, it is important that you take the habit of evaluating the results of your trading plan to determine the total number of trades and the percentage of winning trades and losing trades. This will allow you to establish your defects as an operator so that you do not make the same mistakes again. You can also determine which strategies have really been beneficial and which, on the contrary, produce more losses than profits.

To analyse the market, traders often use one of the following approaches: technical analysis and fundamental analysis. Traders usually focus on one type of analysis or another, however in some cases they operate by combining both as a way to leverage their strengths and compensate for their weaknesses. Technical analysis uses graphs, indicators, statistics and formulas of various types to determine entry and exit points of the market. For its part, the fundamental analysis is based on the study of economic, financial, political, social or other news that can affect market prices. Examples of indicators used in this type of approach are the interest rates of banks, employment levels, inflation, etc.

When designing your trading plan, the operator must choose what type of analysis to use to study the market and make their decisions. As mentioned above, some traders use both approaches fairly successfully, so it is a matter of the trader to use the methodology with which he is most comfortable.

The trader must adapt all these recommendations to his personality and his tastes in such a way that he is comfortable to operate based on his trading plan. Each operator has different goals, needs and realities, so your trading plan must take into account all these aspects and be designed in such a way that allows you to take advantage of the different opportunities presented by the market.

Now that we have a clear idea about what a trading plan consists of and its importance for the success of every operator, here is a summary of the main parts that you must keep:

  • Aspects that must include a good trading plan
  • Goals of the trading plan.
  • Schedules in which we are going to operate.
  • Trading strategies and type of analysis that we are going to use.
  • Trading tools.
  • Indicators that we will use to analyse the market.
  • Evaluation of results.

If you want to be successful as a long-term trader it is important to put your trading plan in writing and follow it in a disciplined way, otherwise it would not make much sense to elaborate. At first it can be difficult, since by our nature we human beings have the tendency to try to save us steps and to do things more by hunch than through a strict and properly elaborated plan. However if we manage to achieve this our chances of gaining profit will surely improve.

A written trading plan will prevent us from getting carried away by the doubts and confusion caused by the stress and pressure that the market can cause on many occasions. Keep a copy of your plan handy and keep it on hand with your computer every time you are operating, so that you can check it at all times.