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Thread: PLAN your trade and TRADE your plan

  1. #1
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    PLAN your trade and TRADE your plan

    Hi, everybody.

    How many times we've been telling this phrase to ourselves? Why really small amount of traders have a trading plan and able to follow it?

    First, let's define what trading plan is.

    It is set of rules that describe your entry, exit and position management technique.

    It's important to distinguish mechanical trading system and discretionary trading plan.

    Mechanical trading system describes setups in very detailed mode, often it looks like "buy when MACD crosses it's medium line after sequence of 3 white candles closing at upper 75% of their range". This detaliization at the first sight simplifies work of a trader, but it offers less flexibility, you can't just adapt your trading system to recent changes in market activity - you should design a new one.

    Trading plan can be less rigid in describing your actions. For example: "Buy after pullback, when price breaks out from the trading range and we've seen signs of big money accumulating before". This describition does not stick your attention to bars, candles or color of indicators. You can be more flexible with your decisions, yet you know the price action you want to capture.

    How to know what plan to trade?

    First of all, it's useful to analyse - what trades can be done over there?:


    1. Breakout momentum trading.

    2. Trading pullbacks on stair-stepping trend

    3. Fading breakouts

    4. Trading sideways market


    There are other trading styles but basically every trade is a variation of one of those trades described above. To be able to consistently follow your trading plan, you should decide - is your trading style for you?

    Every style is absolutely not easy, and your should find that frustration you can live with.


    1. Breakout momentum trading.


    If you like fast markets and don't want to "nurse" bad trades, probably this is for you.
    Your profits will be relatively small (you will take only 20-30% of the whole trend, oh my God).

    Drawback of this style - leaving some money on the table, benefit - perfect timing of the trade. In most cases you will know pretty fast whether you have winning trade or not. Also, in most cases you can at least cover your risk when you are wrong.

    To trade this way, you should have a lot of patience and ability to pull the trigger when moment comes.



    2. Trading pullbacks on stair-stepping trend


    The obvious benefit of this trading style - maximized profit because you get good, often best prices that market can provide. Best winning trades can look very attractive - bought low, sold high.

    Drawback - you go against the market, you can be wrong about how deep correction is or is it a correction at all. You should be ready for some frustrating situations when market takes your stop and finally goes in your favor.
    For example in momentum breakout trading you can close your bad trades to breakeven in 80% cases. When you try to trade pullback, you may be stopped out quickly and several times in a row.



    3. Fading breakouts


    Same drawbacks and benefits like in pullbacks trading. You go against the market, you may be wrong very quickly but you can get very quick nice profits. Also you should have very good timing for your trades.



    4. Trading sideways market


    Sideways markets are often dull enough, but some traders like this slow tempo.

    Benefits: you can have enough time to enter a trade, you might not sit neat the monitor, most of the time you can use limit orders in "set and forget" mode.

    Drawbacks are wide stops, slow tempo (you don't know whether you are right ot not quickly).


    So, you should decide what trading style matches your personality.

    Of course, there can be sort of combination of one and another, but think about your "A-class trades". What do you expect it to be?


    Good luck!

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    Last edited by Value trader; 08-07-2013 at 09:10 PM.

  2. #21
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    We need to plan before trade. Proper planning will aid us to become more clear on what to do. This is crucial when you want to do new things which include most of your daily life activities. Same goes to Forex, proper planning is required.

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  3. #22
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    Quote Originally Posted by shibleiak View Post
    Any business need plan to get success. As we know that Forex is a global market place which is related with world economy and it changes any time. So Forex must need some effective plan and than plan must be used in trading. I am totally agree with you. And yes over lapping time of different market opening and closing is the great time trade.
    Trading without planning is gambling. Plans helps a trader to efficiently manage the risk associated with Forex trading and increase his chances of earning profits. To make a good trading plan and execute it effectively a trader should have good knowledge, experience and discipline.

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  4. #23
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    Quote Originally Posted by Value trader View Post
    Hi, everybody.
    .......
    1. Breakout momentum trading.

    If you like fast markets and don't want to "nurse" bad trades, probably this is for you.
    Your profits will be relatively small (you will take only 20-30% of the whole trend, oh my God).

    Drawback of this style - leaving some money on the table, benefit - perfect timing of the trade. In most cases you will know pretty fast whether you have winning trade or not. Also, in most cases you can at least cover your risk when you are wrong.

    To trade this way, you should have a lot of patience and ability to pull the trigger when moment comes.
    This is my favorite technique. Mostly I only trade using Breakout.
    The benefit of this technique is able to make our DD low, and if we enter market using true breakout, we never get floating loss. I think, this breakout system also the most safe technique for trading forex.

    The danger condition in breakout is when we wrong analyze it, so we fall into false breakout.

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  5. #24
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    Developing a good trading plan does not by itself mean that we can also execute it efficiently in trading. To execute a plan in the most beneficial manner a trader should have discipline and proper control over greed. A trader often ignores his plan to earn more profits.

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  6. #25
    Trader rinaji's Avatar
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    Quote Originally Posted by forexfighter007 View Post
    Developing a good trading plan does not by itself mean that we can also execute it efficiently in trading. To execute a plan in the most beneficial manner a trader should have discipline and proper control over greed. A trader often ignores his plan to earn more profits.
    That's the problem, the fact that many traders who have a good trading plan but they failed due to lack of discipline in implementing the plan. I often experience that condition. Trading plan is a guideline to our trading activities, but if we are not wise in implementing it, I think it is useless, even trading plans will be on display that ignored.

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  7. #26
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    There are many things which a forex trader must always be ready to be doing, and one of which is following plans. Some traders don't even know about planning as a tool for trading forex. Because when you plan, it helps you to understand if you are in the right track when trading.

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  8. #27
    Trader alv_trader's Avatar
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    Quote Originally Posted by Value trader View Post
    2. Trading pullbacks on stair-stepping trend
    The obvious benefit of this trading style - maximized profit because you get good, often best prices that market can provide. Best winning trades can look very attractive - bought low, sold high.
    Drawback - you go against the market, you can be wrong about how deep correction is or is it a correction at all. You should be ready for some frustrating situations when market takes your stop and finally goes in your favor. For example in momentum breakout trading you can close your bad trades to breakeven in 80% cases. When you try to trade pullback, you may be stopped out quickly and several times in a row.
    This is my trading style. I often place a limit order in the area of ​​support or resistance based on the daily range rather than instant executon. The idea is, i can catch the price in the right time to maximize profit and minimize risk. Sometimes with a bit luck, the price pullback and go 50-100 pips away from my entry hahaa

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  9. #28
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    trading forex need good planning to know the direction and to enter in the good point then after making plane we can enter and see the result .planning to any pairs not difficult but to be discipline all the time and respect our analysis is very difficult but we must control our self to make good goals

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  10. #29
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    i think for getting success in forex trading business we have to create an trading plan and i have created a trading plan when i am trading i use Fibonacci entrancement and moving average indicator and get good result from it

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  11. #30
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    Quote Originally Posted by forexianz View Post
    We need to plan before trade. Proper planning will aid us to become more clear on what to do. This is crucial when you want to do new things which include most of your daily life activities. Same goes to Forex, proper planning is required.
    Yes we need a very good trading plan to do forex business successfully,like we can not do any thing in life without making proper plan for it before we want to do that thing,forex is very risky business and that's why we have to plan it first before we want to start this business on live account..

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