why is important to have a trading plan

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Here in this article i want to talk about a  forex trading plan: why is it so important to have a forex trading plan and how it will help you in your trading journey, but first let me quickly explain what a forex trading plan is all about.

What is a trading plan

A trading plan is a complete set of rules that determines how you’re going to manage your trades. That’s all there is to it.

  • Where will you enter a trade?
  • How much you’re going to risk on a single trade?
  • Where are you going to place your take profit target?
  • Where are you going to place your protective stop loss?
  • What timeframe you are going to use?
  • Should the market price move in your favour, when are you going to move your protective stop loss to break-even point?
  • Are you going to move your stop loss to lock in some profit?when, where?

Your trading plan should be simple and straight to the point.

Also read: Top 5 best trading books every trader should read

How will a trading plan help you?

I know a lot of people who have been trying to make a living or at least extra income through forex trading, but have not been successful so far.  Some of these people have been trading forex for years. They have tried so many trading systems and strategies. Some have several good trading strategies, they know much more than what they should know to be  profitable traders, but they are unable to make those strategies work and make money for them.

These people are not consistently profitable simply because they are not able to control their greed, they over trade, they risk more than they should, they don’t cut their losing  positions short as soon as they realise that the market is going against them, ect… Many of you know exactly what I am talking about here. So what’s the solution? A trading plan!

Obviously, a trading plan will not guarantee you a success. However, it will prevent you from making irrational decisions, it will prevent many pathological issues and it will help you minimise losses and enable you to stay in the game a lot longer than traders who do not have a trading plan.

Always remember your success as a trader isn’t driven by your ability to read your charts, or your trading strategy or how big your trading account is but how you control your emotions once you enter a trade. Therefore if you have a trading plan and follow it success might come chasing you.

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If you have any questions at all leave me a comment below and I’ll be glad to answer your question. Otherwise, good luck!

Cheers,

Leonard

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