Elements of the trading plan
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Thread: Elements of the trading plan

  1. #1

    Elements of the trading plan

    If you trade without a plan based on in-depth analysis and testing you seriously weaken your position.

    The trading, as well as politics or war, includes the strategy and tactics - a combination of an overall plan with specific techniques to implement this plan. Woe to the army, which has no policies or practices of warfare. Powerful forces were repeatedly defeated by weaker opponents because of the lack of tactical skills. And just a great trading idea is useless without a viable plan for its implementation.

    Exchange trading involves great emotional stress because of adrenaline, which often accompanies the only idea that you can make or lose a lot of money. Many beginners rush into transactions without having a clear idea of how to get potential profits which is they think within reach. To avoid this trap, you must always approach the market with a detailed plan regardless of your trading style, time period, type of market or method. The slogan which is to remember - plan your trade and trade according to your plan.

    The plan must actually suggest specific steps that you can perform. Common words or vague rules lead to "intuitive" trade, which inevitably results in unnecessary losses. Losses are inevitable, but we must make them appear as rarely as possible.

  2. #2
    Before you start.

    Before placing the order you have to make sure that your approach has a positive probability of profit. But it’s not so easy to do it as it looks. Many smart people are trying to gain profit from the markets, and the most honest and successful of them can tell you that it takes a long time to understand the markets, develop viable trading techniques and start making money constantly.
    You need to learn to respond to a few general questions each of which has a special significance.
    • Why does this script or strategy works?
    • What are their limitations or weaknesses?
    • What is the probability of their profit, and what is the size of the expected profit?

    The answers that will tell you when to open and when to close the order can only be found by deep research and testing trading approach. The purpose of research and testing is to determine the levels of probability and statistics of profit / loss.
    But no matter which approach you use, you need a plan that gives you the clear guidance on the following aspects of each individual transaction or trading strategy. Here are the guidelines.

    1. Where / why to enter the market?

    The phrase "Buy when the market rebounds from a support level" is not a good rule, because different traders can interpret it in many different ways.
    But the rule which is "Buy when the price has risen to at least 2% higher than the lowest minimum for the last 10 days" can be useful. Regardless of how profitable it is, it just tells you what to do and when (note: this is a purely hypothetical rule that has no real value to the trade).

    2. Where / Why to go out with profits?

    Traders are often too worried with the opening orders. However, the actual realization of profits implies the exit condition from the market.
    The rule "Sell when I have a decent profit" does not work - it is a completely subjective condition. "Sell when the open profit is 80% of the average profit per trade, demonstrated in the historical test" – is an example of working elements of a trading plan that shows the way, that you have learned the scenario, or the system of its transactions, and used these results to make logical decisions where to go out from the transaction.

    3. Where / why to go out with a loss?

    The answer means that you have set for yourself the criteria that determine when you are wrong about the market and have to get out of transaction. This is not about deciding how much money you are willing to lose, but about knowledge of the market conditions that will determine your trade as a losing one.
    For example, you may decide that the market will be X or Y points of interest against your transaction, this will mean that the conditions in which, as you expected, the deal would be profitable, have not materialized (or disappeared). This means that you should stop to bear losses and move on to the next trading opportunity.

    4. How much money should be invested in the transaction?

    It is also important, as well as determining entry and exit points of the transaction, to know in advance which size your position is going to be. There are many factors that can determine how many shares or contracts you should buy or sell. Basically, a small amount of capital invested in the transaction increases the chances that you will be able to go through the mistakes and live up to the new deal.
    Assume you have a trading capital of $ 50 thousand, and you want to limit your risk with 2% of capital available in the account ($ 1,000). When you get a buy signal for the stock trading at 25, and the script dictates you to exit the trade with a loss if the stock moves below 21, then you can buy 250 shares, because the stop loss activation at 4 points for the position of 250 shares means a loss of $ 1,000.
    The essence of the market movement is not in the zigzag diagrams and the flashing numbers on the screen quotation. The bottom line is the people who make decisions - other individual traders and investors, professional money managers, financial institutions and governments. The understanding (as possible as it can be) of things that direct these decisions is a quite difficult part of trading.

    Let’s consider the deal criterion of the question 1: "Buy when the price has risen to at least 2% above the lowest min over the last 10 days." This is a fairly common variant of the price, but it can result in different ways depending on the circumstances. For example, you found 30 occurrences of this scenario over the last three years. Further analysis may reveal that only 15 of those cases were followed by a significant uptrend. But 12 of them happened when the report data on the labor market were better than the aggregate estimates of analysts. This market event provides the logical basis for analysis, which otherwise would be a purely abstract argument about price movement.
    Of course, there are traders who assert that such market events and other fundamental considerations may be misleading (or there are too many of them and they are too vague to be effectively treated.) They say that we should focus our attention exclusively on the behavior of prices, not including external considerations. The research and testing will help to reply them, but in any case, the better informed you are, and the more profound your analysis is, the better results you are going to have.

  3. #3
    Best plans ...

    If you properly draw up your own plan, you will find that working on the market with a clear head is easier, it increases the chances of making a profit. Even the best trading strategy will not bring money, if it's not done properly. But it is also true that you can have a good trading plan and execute it flawlessly - and still lose money.
    Any individual trader can lose.
    Even the trading strategy or system used for a long time can lose money if it is based on incorrect assumptions, or if market conditions change. However, following the plan you can increase your chances of success in the future.

    Arbitrary decisions: is there room for improvisation?

    Transactions do not exist in a vacuum, the market conditions are always changing. Experienced traders know how to adjust their plans based on the new developments that change the market environment. Naturally, traders can increase the amount of the transaction capital, if they are sure of success. Other traders prefer to trade only systematically in order to exclude any possibility of emotional decision-making.
    The beginners probably should stick to the small orders (risk) and follow their trading plans as close as possible till they gain enough experience and confidence to justify the discretionary trading.
    Following a trading plan promotes good habits and confidence. Only experience can help you learn the true value of a trading plan, and if you ever deviate from it, you will not know what to fix – either your plan or the technique of its execution.

  4. #4
    Rolling, who does not have a plan of action in the Forex does not depend on the basics of trading is rolling win-loss quick and away from the market in the first 3 months of trading so I would recommend any beginner in Forex that puts a good business plan true to the beginning before making a deposit in the account the real

  5. #5
    Join Date
    Aug 2013
    State Himachal Pradesh
    Planning is very necessary in the field of forex trading business because if you have no planning here you won't be able to make good trades and you will suffer from loss always because it will affect your trading style, trading risk, etc so please focus on planning best of luck for that

  6. #6
    Quote Originally Posted by Khimi234 View Post
    Planning is very necessary in the field of forex trading business because if you have no planning here you won't be able to make good trades and you will suffer from loss always because it will affect your trading style, trading risk, etc so please focus on planning best of luck for that
    anning is very important for get success on our trade,because planning make our step on our trade become easy,because we will know what we must do on each our step on our trade for get success on forex trading,so we must make a plan before we make investment on forex trading.

  7. #7
    Join Date
    Aug 2013
    We need to work on so we can think with clear and calm at a time when the floating loss ... the trick by installing SL and TP.
    then the next question is whether SL we frequently hit or TPnya? so from there we can measure our trading capabilities and what steps need to be done for the future

  8. #8
    Quote Originally Posted by Khimi234 View Post
    Planning is very necessary in the field of forex trading business because if you have no planning here you won't be able to make good trades and you will suffer from loss always because it will affect your trading style, trading risk, etc so please focus on planning best of luck for that
    I agree with you, but the most important thing in the Action Plan in the forex market is to find a powerful strategy to rely on them in the analysis In success in Forex and also dimensions for greed are the most important steps that achieve success in the action plan we follow, as well as capital management dangers few

  9. #9
    i know that a trading plan is good but i dont know why i have never been able to follow mine.but i decided to focus only on the entry signal and the stop.for leverage i increase or decrease according to the strength of the signal.and exit is based on satisfaction.is you think this is wrong look at how long a have traded 3 yrs and am still in the game.

  10. #10
    when we are setting up a trading plan, maybe we can do better to think about the condition of what steps will we do when we experience defeat later. because of the attention to this step, we will make a careful calculation of capital that will be used in the forex trading

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