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February 11, 2014

Basics of a Forex Live Trading Plan

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Forex trading is like any other business. You have to plan it to be successful. This planning would allow you to counter the inherent volatility in the market which would in turn boost your profits and cut down on your losses.

In fact, such is the importance of having a forex live trading plan that most experts in the industry advise beginners to devise a plan before moving ahead with their trading.

However, the big question is what your trading plan should really look like. Here are some things that are absolutely crucial to your forex live trading plan.

Defining Your Goals and Targets

Unless you define your goals and targets, you would not be able to make sustained profits in the market. This component of your forex live trading plan is supposed to give your efforts direction in the market. It is the foundation on which all your efforts in the market will be based.

Your goals and targets need to be of two types i.e. tangible and intangible. Tangible goals would be monetary wherein you should define your profit targets for specific periods. Intangible goals would be related more to what you hope to accomplish as a person in the market.

Creating a Trading Routine to Follow

Depending on your specific situation, your forex live trading plan should contain a routine that you stick to religiously. The purpose of having a routine is that it will give structure to your trading efforts to a point where you can be consistent. Consistency is important in the market because you need to be able to repeat your profitable decisions so that you can build your account equity.

Picking the Right Forex Trading System

Your forex live trading plan will largely be based around the forex trading system that you have chosen to employ. This can be said to be the heart of all your forex trading efforts. You will need to decide upon various things while incorporating a system into your plan such as your position sizes, special order placements, and triggers for entries and exits.

Gaining Control over the State of Your Mind

The importance of having the right mindset in forex trading cannot be understated because the state of your mind is going to have a major impact on the results that your efforts bring in.

In fact, even if you have the basics of forex live trading in control, if your emotions tend to run wild then all the knowledge and skill in the world would not help you in getting profits. Thus, your forex trading plan should be designed to help you control your emotions.

Establishing and Sticking to a Trading Journal

Constant improvement is paramount in the forex market. You need to bring in this aspect into your forex live trading plan. You can do this by including rules and routines for establishing and sticking to a trading journal which you can use at regular intervals to review your performance and make improvements.

 

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