What is your trading plan? - By: Joshua Geralds

If you have been trading Forex, then you would most likely have a trading plan. A trading plan is not when you whip out a coin and toss, then deciding which direction to take based on the results of the toss. While there have been some really lucky people out there, would you really want to risk your hard earned money on a coin toss?
I think most likely not, at least I won’t do such a thing, don’t know about you.
A trading plan gives to the trader an edge. We can define an edge as a higher chance of success. There are no guarantees in Forex, I have seen trades that were so close to hitting my stop loss, just reverse and make me a lot of money. Likewise in fact more often than not, it is the other way around. A trade that seems to be going well suddenly reverses and hits your stop loss. A few moments later it’s back to where it was originally.
Makes me want to rip my hair out and scream! Lucky for me I have got a good money management plan in place that saves a few strands of hair.

A trading plan is the second most important tool a trader has. The first being money management of course. The goal of trading is to make profits, to do that you will need to identify the best possible times to enter into a trade.
But a trading plan is not just about entering and exiting a trade. A trading plan coupled with good money management is what separates a successful trader and a person who is there to donate money to the rest of us.
A properly set up trading plan covers several areas they are namely:
?Entry & exit points
?Profit objectives
?Stop loss
?Position size
?Currency pair
?Indicators to use
Your trading plan will seek out the highest probability set ups for you to trade. That is assuming that you have managed to get your trading plan right in the first place.
You have to separate the truth from the fiction. A properly set up trading plan will offer to the trader consistent profits. If your trading plan is one that hopes for lucky breaks then all I can say is good luck. An edge gives to the trader an insight to how the market might behave in normal circumstances.

I have found that a mix of technical indicators with sound fundamental knowledge works the best for most traders. The world’s best trading plan is the plan that makes you money consistently. To be able to accomplish that, the trader has to know what the economies that the currencies represent are doing. Fundamental analysis plays a hefty role here. Graphical representation of past price action helps the trader to visualize and comprehend market data. As Forex is all about dealing with people, we can safely say that if it has happened in history before, it will happen again. That is where technical indicators come into play. When you take the strengths of both fundamental; analysis and add that to a health dose of technical analysis, your trading plan becomes more well rounded.
There are of course many traders who are very successful with just focusing with either technical indicators or just basing their trading on news. But if it is your aim to trade for a living then having a mix of both will do you good.

About the Author

Dr. Joshua Geralds is a successful investment specialist with over twenty years experience increasing the income of people world wide. For a limited time get his free Money Management to a Million Dollars e-course here: http://www.pipsalot.com

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