Forex trading plan

Every trader, whether trading in forex, stocks, commodities etc should have a trading plan.

In the plan he needs to define the rules or parameters, that determine entry and exit points. In the case of forex trading, the trader needs to specify

- what indicators will be used to mark the entry and exit point,

- long or short the currency pair

- which currency pair(s) to trade

- what time frame to trade

- what leverage to use, ie money management, which determine the lot size

 

Successful trading systems have the 3 main characteristics :

1. They are simple

- Complicated rules will only confused the trader himself

2. They cut losses and let the profits run

- you should have a longer term forex trading system that milks the big trends for profits, and cut losses quickly

3. They follow long term trends

- there is no point in trading for small profits as these small profits will never cover your inevitable losses

 

Finally, having the right mindset is the key to success!

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