There is a long debate between the traders of Forex community. One group of trader’s supports that the traders do not need to develop a plan in Forex. They do not need to think of an entry position and set their stop-loss in a market. This market is not ministerial. If they do their analysis on the market and use their strategy right, they can make money without having a plan. Planning in Forex is only necessary when you are investing or trading for a large banks or institutions. For beginner and intermediate traders who have only some couple of dollars in their account, they can still make money without planning their trade. They just need to analyze the market and place their trades.
Figure: Versatile trading features of Saxo
The other group of traders does not agree with the first group of traders who are in support of trading without planning. They say that planning is necessary to know if you will make money in this trade or not. They also argue that if these new traders do not plan when they have some couple of dollars in their account, how they are going to plan when they will be trading for thousands of dollars. This question is very logical. If you do not know how to drive a car, there is no way you are going to make it in the first place in a race car competition. You need to start practicing from your beginning of your career and plan your trading to reach the professional level.
Should you not plan your trades then?
You cannot advance your career if you do not plan the market. Most professional traders in this Forex sector knows what they are doing and their expected profit amount before they are trading CFDs. It is very important for your fundamental knowledge also. When you think of the market and make a plan, you will see that you can organize your trading strategy in a more professional way. Traders who do not plan their trades are more likely to get out of the market and blow out their capital. The difference between having a plan and not having a plan is like driving a car without brakes. If you have a plan before you trade, you can stop your trading and be safe in volatility. If you do not have a plan, when you start trading you cannot go back and break your car.
How to plan your trade
Planning your trade is very simple. Some traders often make things very complex without knowing the nature of this market. Before you place any trade you should calculate the amount of money which you are going to risk. Once you find the risk amount, ask yourself whether you are comfortable in losing that certain amount money. If the answer is no, then you should reduce your lot size and risk less. There are many traders who even don’t know the importance money management. In the financial industry without having a perfect money management plan, no can make a profit on a regular basis. You need to aim for high-risk reward trades and only then you will be able to lose more trade yet make money at the end of the month. Try to develop a simple trading system like the UK traders and use the formation of the Japanese candlestick pattern to trade the key support and resistance level. Focus on the existing trend and trade in favor of it. Being new to this industry, you should never invest any amount of money which can’t afford to lose.
Summary: Having a trading plan is very crucial for developing yourself as a successful trader. You need to do the perfect market analysis before you place any trade. Learn price action trading strategy as it is one of the best ways to trade the live assets and follow proper money management.
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