"Fail to Plan and You Plan to Fail"
Having a Forex trading plan is one of the key elements to becoming a successful Forex trader. Many traders never even make a trading plan, let alone use one regularly. It’s very important that you do both; make a trading plan and use the one you make…don’t just make one and then never look at it like many traders do.
Assessing your skill
Have you tested your strategy? Are you confident that it would work? Can you follow your strategy without hesitation? If you haven’t mastered your trading strategy yet, it might be best to practice and tweak it until you’re confident in implementing it.
Set your risk level
When trading, you should set a risk level that you’re comfortable with. Professional traders tend to risk no more than anywhere between 1-5% of their capital – what you choose should be dependent on your trading style and risk tolerance.
Set yourself goals
Before you start trading, you should set yourself goals in terms of realistic profit targets and risk/reward ratios. As a trader you should set weekly, monthly and yearly profit goals and assess them regularly to see if you’re on track.
Prepare for trading
Before you start each trading day you could follow a series of steps before placing your first trade. For example, research the major news announcements for the day, set up support and resistance zones on your charts, or even read through your trading plan.
Whatever trading system and program you use, label major and minor support and resistance levels, set alerts for entry and exit signals and make sure all signals can be easily seen or detected with a clear visual or auditory signal.
Set Exit Rules
Most traders make the mistake of concentrating 90% or more of their efforts in looking for buy signals, but pay very little attention to when and where to exit. Many traders cannot sell if they are down because they don't want to take a loss. Get over it or you will not make it as a trader. If your stop gets hit, it means you were wrong. Don't take it personally. Professional traders lose more trades than they win, but by managing money and limiting losses, they still end up making profits.
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