By: Chime Amara
What is a trading plan？
A trading plan is a systematic guide that points to the trader the best time for trading, entry and exit points, and dangerous moments to stay away from the moments. It further shows him the pairs to trade and those to avoid daily in the market. The trading plan acts as a consultant and super guide for the forex trader; showing him the best trades to give him the greatest profits and the risky ones to avoid.
What is a trading plan？
A trading plan is a systematic guide that points to the trader the best time for trading, entry and exit points, and dangerous moments to stay away from the moments. It further shows him the pairs to trade and those to avoid daily in the market. The trading plan acts as a consultant and super guide for the forex trader; showing him the best trades to give him the greatest profits and the risky ones to avoid.
Importance of creating a trading plan
The importance of having a trading plan for every trader who desires to be successful cannot be over-emphasized. The following are the basic importance of creating a trading plan:
A. It helps to control the trader's emotions: One of the major reasons why traders lose money in the forex market today is trading with emotions. This induces one to jump into the market at odd times. With a proper trading plan put in place; the trader can control his emotions and avoid rushing the market.
B. It disciplines the trader: Often trading plan acts like a disciplinarian to the trader showing him the number of trades to take and the suitable lot size to use. Trading Plan in this regard is seen as a consultant for each trade.
C. It saves the trader from excessive loss: Adhering to a good trading plan here the trader to avoid excessive loss. Thus it indicates the stop loss to choose from and the possible take profit target for each trade.
D. Trading Plan indicates the best pairs to trade: Of course, not all pairs can be traded at once. The trading Plan shows the best pairs to choose and those to place on the trader's watchlist against future entries.
E. Trading Plan highlights the best days for trading: Not all days are best for trading, especially days when the trader has no insight into the market trend. A trading plan helps the trader to stay away from trading when he is not sure of the market trend.
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