Forex trading as any other systematic work needs a certain plan in order to be organized and successful. If you think that chaotic execution of trading positions will give you high profits in Forex trading, so I am afraid you are mistaken, because Forex is not a casino, but a very complicated system that requires a systematic approach. In general a trader’s plan looks very simple:
1. Watching and analysis of the charts of the chosen currency pair
2. Making a trading plan
3. Eneting the market, opening a trading position
4. Closing a trading position
5. Analysis of the trading results.
Now let’s have a more detailed look to each stage of Forex trading.
Market’s analysis. Either you use fundamental or technical analysis, your task on that stage is to find a good situation to enter the market. This stage is very important as the success of your trading depends on your decision and the ability to find an entering moment that has high potential to make profit. To find this moment requires a lot of practice and trading skills.
Creating a trading plan. After you have found a potentially good situation to enter the market, you can proceed to creation of the trading plan. According to the market’s situation you decide on the conditions, reasons, and tools that you follow to open a trading positions. Levels of stop loss and take profit orders. Risk management for your position that includes the size of transaction, the balance of free margin, leverage, etc. The possible conditions for changes of your trading plan.
Entering the market. The plan you have written will play a role of a direct instruction for actions and will relieve you from stress and emotional pressure while opening a trading position. What you need to do is just to follow your own instructions for opening the trading positions and placing the stop loss and take profit orders.
Closing of a trading position. This is a moment, when you need to close a trading position according to your plan. It may be executed manually by yourself or achieving a take-profit order. Whatever method of closing a trading position you choose, here is a time for the last stage of trading.
Analysis of your trading activity. When transaction is closes and there is no any reason for pressure and stress, it is a time to analyze your action regardless to the results of your trading. Try to pay attention to the following points. Did you include everything to your trading plan? Have you found new circumstances that must be considered in the future? Did you follow the plan? Answering these questions will help you improve your trading strategy and make it more successful.