Forex Trading

Create a Forex Trading Plan

Swing trading, sometimes also known as momentum trading, consists of a medium-term trading strategy that aims to capture more market moves. Swing traders do this by trading both with major trends and also against them when the market is correcting, so they should be willing to hold overnight positions. Many successful strategies for trading forex exist, but not all of them are suitable for every trader. Select a strategy that best suits your particular situation, including your available time, personality type and risk tolerance. These are covered below based on the typical time involved, ranging from short to long term. Okay, which currencies move 100+ points every day, and do it in a manner that you can identify with your technical tools and take advantage of?

How do I stop losing forex?

  1. Do Your Homework.
  2. Find a Reputable Broker.
  3. Use a Practice Account.
  4. Keep Charts Clean.
  5. Protect Your Trading Account.
  6. Start Small When Going Live.
  7. Use Reasonable Leverage.
  8. Keep Good Records.

Usually, political instability impacts the demand for the country’s currency negatively. Investors tend to avoid countries and currencies in political turmoil. The country’s GDP is among the most important indicators of economic growth. It sums up the production of goods and services in the country providing information on the country’s performance and economic strength. Get $25,000 of virtual funds and prove your skills in real market conditions. When it comes to the speed we execute your trades, no expense is spared.

Get the Guide as a PDF

Money management is the most important aspect, as it controls risk. Superseding the other two elements, if a trade is too risky based on the money management rules, don’t take the trade. It doesn’t matter how much money you make if you are willing to lose it all on a few trades. Always keep in mind that using leverage to take greater risk in pursuit of higher profits can also result in bigger losses. One of the core components of a trading plan is a trading journal, which is essentially a diary or record of your trading activity. Journalling your trading activity will help you to assess the performance of your trading strategies as well as other factors of your trading plan, such as risk management and trading psychology.

forex trade plans

If you trade based on your emotions, misguided information, or without a clear plan, you will hit the rock bottom and will lose all the money that you invested in it. A good trading plan forex animal will allow the trader to objectively decide when to take a position, in what direction and in what amount. It will also contain guidelines about when to take losses and profits.

It may mean everything from getting enough sleep as well as being in a positive mood and environment that is devoid of any kind of distractions, whether physical or psychological. ” For example, if you got out at the wrong time, your trade goes bad, and you get emotional. If you get out at the right time you become confident, maybe overly confident.

How to Make a Trading Plan: Summary

By letting their profits ride and cutting losses short, a trader may lose some battles, but they will win the war. Most traders and investors do the opposite, which is why they don’t consistently make money. Most traders make the mistake of concentrating most of their efforts on looking for buy signals, but pay very little attention to when and where to exit.

forex trade plans

A $1,000,000 account holder may not want or need to risk $10,000 (1% of capital) on a trade and therefore only risks $2,000. In this case, the maximum risk is not a percentage of capital, but rather a fixed dollar amount which is less than 1% of total capital. As capital grows, the dollar amount risked on each trade will grow. This is because 1% of $30,000 is greater than 1% of $25,000. So your percentage risk always stays the same from trade to trade, but as capital grows the dollar amount you risk becomes more, potentially resulting in larger dollar gains as well. If capital shrinks due to losses, the dollar amount risked on each trade will diminish .


In short, a fundamental analyst utilizes all available information in gauging a currency’s strength. Attention is focused on key economic reports and data, including GDP and unemployment data, production data and announcements of interest rates. No matter your experience level, download our free trading guides and develop your skills. Sign up for all the latest updates from our Rockfort Academy including news, industry analysis and updates from trading central team. Hence, if you plan to fight the market, you will certainly fail in the long term.

Swing traders tend to focus on entering and existing positions based on momentum indicators that provide buy and sell signals. Traders use them to find overbought or oversold markets they can sell or buy. Swing traders might also buy ahead of support or sell before resistance levels that develop on the charts of the exchange rate for a currency pair. News traders typically need to monitor economic calendars for key data releases. They then watch the market closely before the event to determine key support and resistance levels so that they can react quickly after the event based on the results. News traders need to maintain strict discipline when managing their currency positions during such fast markets and often place stop-loss and take profit orders in the market.

For the rest of you it is okay to use our trading plans until you get the proper mindset to start doing it yourself, or until you have time in your schedule. Forex traders who prepare daily trading plans are part of an elite group. We suspect that less than 1% of traders have a written plan in front of them every day, and the results and ensuing lack of success are predictable. Talking about money and risk management can be a difficult step for many people. Trying to determine what your risk tolerance is can be even harder.

When you are trading forex, your emotions play a big role because you are dealing with money. Nobody likes to lose money, but everyone loves making money. Trading psychology is the least understood concepts in forex trading. Yet, it plays a very big role in your overall success as a trader. The Position Trader – The position trader who holds positions open the longest of all traders.

Set Exit Rules

This means that it could be getting overstretched and some traders will use this as a signal to expect the market to fall back. Similar in function, but in the opposite direction beaxy review to the breakout strategy is the breakdown strategy. This forex trading strategy is designed to jump aboard a move when a forex market slips below a previous support level.

How hard is it to learn forex?

There is a steep learning curve and forex traders face high risks, leverage, and volatility. Perseverance, continuous learning, efficient capital management techniques, the ability to take risks, and a robust trading plan are needed to be a successful forex trader.

You need to have a routine in your trading activities; there is a trading philosophy that revolves around trading Forex like a sniper not like a machine gunner. Trading objectively with your plan in place will allow you to have more confidence and less emotional participation. Then decide when to open a position and in which direction , this can be determined by analysing charts or reading up on the latest market analysis.

This will, over time, highlight the areas where improvements can be made to help you become a better trader. You can be traditional and conservative or radical and modern. Just as investing styles and preferences differ, so do goals. Check how long you want trades to last and what style of trading is the best for your personality. Short-term trading can lead to massive losses if you don’t know the ABC of trading.

Currency Pairs To Write Trading Plans For

You have the choice between day trading and swing trading, both of which have greater income potential than longer-term investors. The trading plan should be clear about the entry rules as well as exit points that are safe. This will ensure there are no abrupt entries or sudden withdrawals from the market resulting in unexpected losses. Entry base currency definition rules inform you about how and why as well as when you can enter the trade, while exit rules center around how, when, and why you leave the trade, i.e. whether for profit or loss. When trading, as in most endeavors, it’s important to start at the end and work backwards to create your plan and figure out what type of trader you should be.

Ask yourself, “How much money do I really have to trade with? One mistake that people make is thinking that trading is an investing or holding activity, and keep depositing money. Liquidation can and does happen when 100% of the total margin requirement of all open positions is no longer met. Those who make money may not have more winning trades than losing; they may just manage their losing trades so the winning ones make them profitable overall. It can be easier to win fewer times and still be profitable. A common characteristic of new traders is to quickly take profits but let losing trades run, consequently they have to maintain a higher risk to reward ratio.

A good trading plan should also have a listing of the economic news drivers that could affect trading, these news drivers are visible on our world news calendar for all 8 currencies we trade. By focusing on preparing trading plans for the higher time frames we will always keep our money management ratio in order. Money management ratio is the number of pips you might make versus the number of pips you risk.