My Forex Trading Plan.

“Plan your Work and Work your Plan”

Without a plan, One tends to do What’s passive and easy; Not what’s necessary to make real progress.

A plan is a guide for daily execution.

It’s your reliable system for making progress.

What most people call plans are just wishes. They want to get more work done daily, read more books, start working out, or start a passion project, but they end up procrastinating.

Without a plan, you’re hoping. You hope you’ll find a way to make progress

Hope is a terrible strategy, If you really want to achieve anything worthwhile, you have to make plans. Otherwise by failing to plan, you’re planning to fail!

Jim Rohn said, “Either you run the day or the day runs you.” When you think of things ahead of time, consider how to get them done, and make plans to do them on a specific day, week or month, you will put yourself in the best position to control your time and actions. This gives us a feeling of control which motivates us to act.

Trading is no different. To accomplish great things, we must have a clear vision backed by definite plans.

Before you ask “SHOULD I BUY or SELL?” it is important to think critically because every scenario before execution is different. However, if you have a plan of attack or checklist, it gives you a better determination of the likely outcome along with a more constructive conversation that not only gives you better insight but also helps you raise your thinking level.

If you show a chart and say “is this a buy or a sell” there are arguments for both. What you need to do is provide context.

• What’s your trading plan?
• what time of the day is it? What markets are open?…. Is there Volume?
• Is there any upcoming news that could affect this pair?
• How long have you been looking at this trade? (In other words, have you been monitoring the direction for a while…noticed any patterns and not just flipped MT 4 saying “It’s time to trade”)
• Any candles look weird/interesting(in other words do you see a pattern)?
• Where are your Support and Resistance zones?
• What are your goals with the trade?

Coming Up with a Good Trading Plan.

To come up with a plan that works for you in trading, you need to put the following into consideration:

Identify your purpose for trading

First and foremost, you need to know why you are trading in the first place.

Do you have a passion for the financial markets?, Are you seeking financial freedom? Are you looking for a career as a trader? etc…

Personally, i trade to earn an income in which i can live off and i don’t need to work a 9–5 job in order to provide for myself. Trading will provide me with these opportunity as there’s no limit as to how much money you can make whereas at a regular job there is a maximum amount of money you can earn. I would like to compound my account to a point where my account size would provide me freedom to do things i enjoy and travel.

I also have mad love for the financial markets and one day i would like to start my own capital firm.

What type of Trader am I?

I am a scalper, day trader and a swing trader. If a trade meets my criteria and its in line with higher time frame (HTF) directional bias, i will let it run until i believe the momentum no longer there and exhaustion is occurring. This is after i have already locked some of my positions with at least 10–15 pips and moved my stop loss to break even.

I understand the market moves in waves and therefore i must always trade with HTF directional bias overall. I understand that i cannot predict where the market will go next and i cannot control the market. However, i can control myself because i understand the market don’t owe me anything and the market have no care for my emotions.

I will control myself to only take trades that meet my criteria and i will wait for the trades to come to me rather than me chasing the trade.

Patience is important for my longevity in the financial markets.

What are my Strengths/weaknesses?

I am a person who is determined, organised and disciplined. Each of these values in which I possess will play a key role in my success as a trader. Determination will allow me to continue to trade when times are hard and I may find myself on a losing streak. Throughout this time I will stick to my plan and only trade setups that are of the highest probability. Organisation will allow me to have a clean and tidy trading setup and be aware of any fundamental news releases. Discipline will allow me to wait patiently for a high probability to form before executing a trade and this strength will allow me to follow my trading plan. The weaknesses which I possess are becoming offended & upset, following other people’s analysis and seeking revenge in the markets. I understand that the market does not owe me anything and it does not care about my emotions. If I am mentally strong and stick to my strict trading rules I will be a successful trader. I understand that I should not take trades if I am emotionally engaged in a certain bias. I will only take trades that meet my criteria and what for them to come to me. I should always follow my own analysis and not become distracted by others. If I am able to stick to my own analysis I will become a much more successful trader in the long term and will increase my confidence. A weakness that I am likely to find while trading is wanting to recoup a loss quickly. I understand that this will increase my losses and that I should never revenge trade. If I am on a losing streak and am losing multiple trades I should leave the markets and come back the following day. I understand that the markets are not going anywhere and there will be many more opportunities in the future to make money.

What’s my Daily Pre-Market Routine?

Before each session in which I am trading I will be aware of any fundamentals that come into play during my trading session. I will also look to see what my overall directional bias is for the pair and only take trades that are in the same direction as my higher time frame analysis. For example if Monthly, Weekly and Daily are bearish I will only look to take sells during my trading session. As long as the bearish momentum is still evident in the market. I will only take counter trend trades when I feel I am able to do so. Before the market I will also look at pre markets on CNBC to get a general feel for what is happening in the world markets and how it may affect my trading session. Before the market I will make sure all the appropriate zones, levels and trendiness are applied to the charts. I will also be ready to look at the momentum of the candles and trade in accordance with my trading plan. I will also have a drink bottle on my desk with my notebook and pen also.

What about Markets & Pairs?

I understand that professional traders which one day I wish to become, restrict their focus to a limited number of currency pairs, often a maximum of two.

As a rule of thumb I will only be trading GBPJPY and EURJPY. For the time being I plan to only trade in the foreign exchange market, however in five years once I become consistently profitable I would like to invest in various share markets throughout the world in order to diversify my portfolio and grow my money over the long term.

Time frames?

The time frames in which I wish to gain analysis, directional bias and take trades on are the Monthly, Weekly, Daily, 4 Hour, 1 Hour and 30 Minute Charts. I will gather my overall directional bias for the currency pair (Uptrend, Downtrend, Consolidation) from the Monthly, Weekly and Daily Charts.

The components that will assist me in identifying the overall trend are the candlesticks, market structure Trend lines and any key fundamentals. I will also look at potential quarter points which are rounded numbers such as 100, 102.5, 105 etc that price may be heading too. I will also plot Support and Resistance zones on each time frame to get a better understanding as to where price may be heading.

How will i Manage my Risk?

Risk management focuses on the steps necessary to minimize losses by assessing market conditions, risk-reward on a trade, probability and the use of stop losses.

I understand that it is important that my risk reward ratio for any given trade is greater than 1:2. I will only take trades with low risk and high reward. I will only risk 1% per trade and am willing to stack up to 3 positions maximum if I feel confident about the trade. I will calculate my 1% risk by using the following calculation: 1% of Account divided by Stop Loss Pip Amount = Lot Size. For Example Risk 1% on a trade with a $500 account. $5 = 1%, Stop Loss = 10 pips. The position size would be 0.05, (50 cents per pip.)

Money Management and Capital Preservation

Money management is what is important to maximize profits by using tools such as trailing stops, adjusting position sizes and closing losing trades early.

While scalping it is unlikely that I will use trailing stops due to the nature of the type of trading. However I may decide to move stops to break even so that trades become risk free. I always try to move my stop loss to break even during any trades when I believe it is appropriate to do so. I will move my stops in to profit when I feel that price will not stop me out when swinging. I will adjust my stops as I find appropriate.

The maximum amount of capital I am willing to risk per trade is 1%, but I am willing to stack up to 3 positions if I feel my analysis is strong. I am not willing to risk more than 3% of my account to any given trade. Every trade I make I always have a physical stop loss. I will never use mental stops and my stop loss will always be physical. My stop loss will always be physical as I understand that to survive in this business, capital perseverance must be a priority. My stop loss should always be market controlled and not a fixed percentage (e.g. 2%) of my equity.

When will I STOP Trading?

It is important that I know when to stop trading for both my discipline and to maintain good risk management.

Having a predetermined goal for the day and identifying when I will stop trading for the day will help me to prevent revenge trading trying to recoup losses and will also prevent me from becoming greedy on winning days. I understand that the market can turn against me at given anytime and that greed will not help me become a successful trader.

I should take the opportunities that have been presented to me and be satisfied with these opportunities. I will most likely finish scalping when there is no liquidity and momentum left in the market for the opening session in which I wish to trade. Once my profit targets have been reached I will stop trading.

On a losing day I will stop trading if my positions are losing. I understand that some days there are no trading opportunities in the market and therefore I will not take trades at all. This directly relates to the fact I wait patiently for high probability setups and do not chase a trade, I wait for the trade to come to me.

What’s my Exit Strategy?

I understand that every trade in which I place must have an exit strategy and my take profit should be set.

Exit strategies are just as important as entry strategies.

I understand that my exits should be market controlled and that when the opportunity arises to lock in profits I should lock in profits. I will always let my winners run and cut my losers early. It is important that I let the big winners run so that I can realize a greater proportion of the increased gains on offer. These additional profits could transform an overall trading strategy from one that barely breaks even into one that is very profitable.

Cutting losers early is important so that I preserve my capital. I understand that there will be plenty more opportunities to make money in the market and that I am in this for the long term not the short term. Trading is not a get rich quick scheme It takes time.

Set Ups & Entries Strategy

Check Monthly, Weekly and Daily for current trend. My setups are primarily using Support and Resistance zones in line with higher time frame analysis. I will plot 4 hour support and resistance zones using line & rectangle tool. Use trendiness and look for classic chart patterns at zones.

Trading will primarily take place on H4, H1 M30 and 15 minute charts. I will trade with overall higher time frame bias. I will keep my trading stupid simple and buy at support and sell at resistance within my zones.

My confirmations for entry will be:

• Exhaustion and Retests of Zones
• Confirmation candles at zones (Hanging mans, Hammers, Engulfing Dojis etc)
• Significant Close above Resistance and Close Below Support zones.

What do i do after Market Closes?

Once my trading session has finished I will record today’s trades into the journal and analyse the trades in which I have taken to see what went right and what went wrong. I understand that it is important to always learn from my mistakes and improve my abilities. I will look to see if the trades in which I took were according to my plan, my strategy and meet my risk management policy. I must always keep my trading journal up to date.

Evaluation of each trade

After each trade whether it be a loss or a win I must ask myself what was the reason for this trade. If it was a win I must see why it was a win, did I adhere to my trading plan and trust in my analysis. Even though it was a win was there anyway in which I could have took more profit. Likewise if it a losing trade I must see why it was a losing trade and check if I followed my trading plan. It is important to review each trade so that I can learn from each one.

Remember, Tomorrow belongs to the people who prepare for it Today because planning gives them a tremendous feeling of confidence and personal power!!