How Do You Write a Forex Plan?
How Do You Write a Forex Trading Plan?
The following is a trade plan examples template of a best forex trading plan:
JUSTIFICATION
1. FX Trading IS A BUSINESS, SUCCESSFUL BUSINESSES ALWAYS HAVE PLANS
- Businesses that are successful always begin with a plan.
- Successful business planning will guide you to success, think of the forex trading plan as a map: it is a constant reminder of how you'll consistently pull profits from the forex market.
- Difference between a successful forex trader & a losing one is the forex trading plan.
2. TO KEEP ME IN THE RIGHT DIRECTION
Consistency is important in your routine to measure how successful you are.
Keep you on target, read your forex trading plan everyday and stick to it.
When it comes to your forex trading plan you should think of it as a map that shows you this is what you follow, it should have clear forex trading rules which specify when you open or close a FX trade transaction.
Your Forex trading plan should cover all aspects of forex trading, you should read your forex trading plan everyday until it's on your finger tips so that when you are trading on the fast moving market of forex you will always know what to do in every situation.
Your forex trading plan can be as simple or as complicated as you like, but the most important thing is that you have one. By having a forex trading plan you have an advantage over the market, you will have better odds of making a profit than those forex traders who do not have a forex trading plan.
This forex trading plan guide topic provides forex traders with an example forex trading plan which you can use for creating your own forex trading plan. By now you have already written down the justification part of your forex trading plan, If not get a pen and paper and write the justification part. Next we shall look at how to write the forex trading system.
Forex plan is one of the secrets that can help you to improve your profits. A good forex training guide like this one should show you how to come up with a forex trading plan using a forex trading plan which you can use as example to create your own.
One of the most commonly asked question is, Is Forex profitable? one of the methods to make it profitable is to have a good forex trading plan.
IF YOU HAVE A GOOD Forex Trading PLAN AND ARE DISCIPLINED ENOUGH TO STICK TO IT When FX Trading YOU WILL BE SUCCESSFUL.
GOALS OF THE FOREX TRADING SYSTEM
- Ability to IDENTIFY A FOREX TREND AS EARLY AS POSSIBLE .
- Ability to AVOID WHIPSAWS .
The forex system should find a compromise between the 2 Goals,
Find a way to identify a forex trend as early as possible but also find ways to help you distinguish fake signals from the real ones.
FUNCTIONS OF EACH FOREX INDICATOR
MA - Identify a new forex trend as early as possible.
MACD - Identify a forex trend as early as possible.
Determine strength of a continuing forex trend.
RSI - Swing failure to confirm the begin of a new forex trend.
Extra confirmation forex indicators & tools to help determine the strength of our forex trend.
Parabolic SAR - Help to ensure that we are not caught up on wrong side of the forex trend.
Trendlines - Signals a reversal when the trend line is broken
Forex Price Action Signals - confirm the weakening of a forex trend.
Bollinger Band - for forex price action study
To learn more about each forex indicator & how these indicators can be used to generate forex trading signal setups you can go to Forex Technical Indicators Section
Forex CHART TIME FRAMES
- Main forex chart time frame is the 1H.
- Forex Signals are generated on the 15 minute chart time frame.
15 Minute Forex Charts
- Trendlines (Support and Resistance)
- 5 & 7 LWMA
- RSI (14)
- Bollinger Bands (20, 2)
RULES
LONG ENTRY
Entry
15 Minute Forex Charts
- Both Moving Averages are moving UP
- MACD Above Zero Center Line (Not MACD moving UP)
- RSI >-> 50
- Parabolic SAR is below the forex price (Support)
When a forex signal is generated on the 1 Hour Chart, use the 15 minute chart time frame to open and close positions.
LONG EXIT
- RSI gives opposite trading signal
- Forex Price breaks out Support Trend Line
- Parabolic SAR is hit (Trailing Stop)
RULES
SHORT ENTRY
Entry
15 Minute Forex Charts
- Both Moving Averages are moving DOWN
- MACD Below Zero Center Line (Not MACD moving Down)
- RSI <-< 50
- Parabolic SAR is above the forex price (Support)
When signal is generated on the 1 Hour Chart, use the 15 minute chart time frame to open and close positions.
SHORT EXIT
- RSI gives opposite trading signal
- Forex Price action breaks out Support Trend-Line
- Parabolic SAR is hit (Trailing Stop)
ROUTINE
- Forex signals are generated using 1H forex chart time frame and executed using the 15 minute chart time frame.
- Forex trading signal to be executed immediately rules are met.
- Entry alert signals should be executed during daytime.
TIME OF DAY TO WATCH MARKET
Watch market during daytime when most companies & online forex brokers are open for trades. Use this to create a suitable forex trading schedule.
Example Trading Plan Template
Forex Tips - You can use the MT4 Forex Trading Software Platform to save this forex trading plan example as a forex template on the MT4 platform - that way you do not have to lay it afresh every time you open a new forex chart. If you want to learn how to save a forex template on the MT4 platform, read: MT4 Forex Trading Platform Tutorials.
MONEY MANAGEMENT RULES
- Day trading - risk High return method
- Trade when I have a high risk to reward ratio 3:1 or more
- Stop loss = Parabolic SAR
- Set TP target 40-60 Pips
- Never transact beyond 3% of forex trading account equity
- Never risk more than 2% on a single trade
MINDSET/PSYCHOLOGY
- Trade without Emotions (greed, fear, impulse, bias, anticipation, overexcitement)
- I trade what my eyes see not what I feel.
- I will be patient.
My job is not to be the forex trading system!
It is not to decide which signal looks promising.
That is the job of my forex system - that has a set of rules that tells me this is what I follow. Don't get caught up in forex price action making rules as you go along.
MY JOB DESCRIPTION IS
To sit patiently & wait for my forex trading strategy to signify and show that it is time to enter or it is time to exit. And then with great focus I execute forex trading plan as outlined.
Taking trades not indicated by the forex trading system, second guessing the forex system & not taking signals given, hesitating & getting in late, anticipating & getting in early are all common place & boil down to lack of faith in plan & not having a burning focus on accurate execution.
GOAL: To have 100% undivided focus on mastering my ability to execute my Forex trading rules accurately.
The more you develop the ability to step back from forex price movement and watch market dispassionately, waiting for a signal, the easier it'll be to witness fluctuations of your emotions without getting sucked into them and allowing them to throw you off your game.
WEAKNESS
- I am greedy.
- I over-trade
- Make a list of all your weaknesses that are interfering with your trading. This is the first step to help you overcome these weaknesses. Use Forex psychology to help you overcome them.
Note: by writing down your weaknesses you will begin recognizing them as you make progress in forex trading, once you do this you will start to avoid this mistakes & your trading results will improve.
GOALS
- To focus on exit just as much as I do on entry signals.
- Always protect my forex trading account using stop loss orders, forex money management methods, follow with the forex trend direction & always following the rules of my forex trading strategy.
- Never second guess or go against my forex trading strategy. To always keep up my discipline.
- Follow all the rules of my Forex strategy & never break them.
- Trade fewer times and execute all my forex trade signals correctly. Trade what I see, what the forex trading system + forex charts are telling me.
- Sit patiently & wait for forex trading signals from my forex trading strategy.
- Achieve consistent profitable results before opening a live forex trading account.
FOLLOW THIS SYSTEM
This is the most important part of creating the forex trading system.
Always follow the rules
Stick with the rules
Be disciplined & patient enough
FOREX JOURNAL
Log all my forex trade transactions in a forex trading journal so as to track my training progress & improve my forex trading execution methods.
The forex trading strategy uses momentum to determine trend of any forex instrument.
Even if you are new to forex market & you don't know how a forex trading system looks like, this forex system example illustrates to you how a forex system forex strategy should look like, the Forex tutorials described in other sections of this learn forex training website will also explain further the different aspects which you need to learn.
Hence, the aim is to help you come up with your own complete forex trading strategy that is if you're looking for one, by showing you one that's already complete. In fact you can just use this forex trading plan examples as it is, or make a few adjustments so that it fits your forex trading style.
Objective is to help you improve your forex trading results by using a forex trading plan that is written, and another advantage is that this forex trading plan will offer you a chance to improve your knowledge and it will help you trade better, make pips and keep them so that you do not keep giving them back to the forex market.
Read this forex trading plan training guide about developing a forex trading plan of your own, along with the learn forex courses and forex trading strategies listed at top of this learn forex trading guide.
The Most Beneficial part of using this forex trading plan is the "Money Management Part" you will learn how to forex trade & minimize risk, which is the most important thing when it comes to the forex market trading.
How Do You Write a Forex Trading Plan?
