Throughout this series, we have looked into what goes into making a successful trading plan, and the things that you have to do in order to make it a success. Today, we’re going to finish off with a recap of all the main points we have covered, and reinforce the most important ones.
Basically, trading with a plan can make all the difference between making money on the forex market and losing it. In essence, it is an organized approach to executing a trading system based on your outlook and market analysis, while taking into account personal psychology and risk management.
Also, it doesn’t matter how good your trading plan is – if you don’t follow it, it just won’t work.
Those traders who take a disciplined approach to trading are the ones who stay in it for the long haul – long enough to start making serious money. With a disciplined approach, you can still be profitable even if you have more losing trades than winning ones.
To recap, here are the key advantages to having a trading plan:
- It’s simpler to trade with a plan than without one.
- It reduces stress, thereby improving your health.
- It gives you the ability to evaluate your performance, identify issues, and make corrections.
- It serves as a way of preventing psychological issues from influencing your trading in a negative way.
- When adhered to strictly, it will reduce the number of bad trades.
- It can help to prevent you from behaving irrationally in the heat of the moment.
- It gives you the tools to control the only thing in the forex market you can control – yourself.
- It will give you the discipline to become a trader, rather than a gambler.
- It will enable you to trade outside your comfort zone, allowing you to make profits in situations when fear would otherwise have you cut and run on a trade that could have been profitable.
- A trading plan is like a roadmap that tells you how to get to the point of consistent profitability. And if you make a wrong turn, you will know about it quickly enough and have the opportunity to correct it before the losses get out of hand.
One final thing that you should always remember about a trading plan is that it is always a work in progress. It needs to change and evolve to reflect changes in the market, your strategic approach, and your personality as a trader. The main point of a trading plan is to keep your eyes on the prize, and prevent you from becoming distracted. Remember, a trading plan is only as good as you make it, and if you don’t stick to it, it won’t be any good at all.
I am a writer based in London, specialising in finance, trading, investment, and forex. Aside from the articles and content I write for Forexthink, I also write for IntelligentHQ and have previously written for euroinvestor.com and tradingquarter.com. Before specialising in finance, I worked as an article writer for various digital marketing firms. I grew up in Aberdeen, Scotland, I have an MA in English Literature from the University of Glasgow and I have played bass in various bands. You can find me on twitter @pmilne100 and