By sticking to your plan, you would hopefully trade larger lots and make better profits over a period of time. However this is easier said than done. But if you follow this advice, you would in effect be following very safe trading guidelines. The guidelines in your forex trading plan could very well be set up to watch out for both exit and entry rules in entering and exiting a trade, and the common pitfalls you got to avoid at every step. A good currency trading plan will remove all the emotions from your trades.

Some points that you should consider including in your currency trading plan are as follows: Analysis Criteria: Specific Criteria: Specific conditions must be met to consider a currency pair to trade with and requires the use of technical indicators such as trend indicators, momentum indicators or hybrid indicators, how you read them, chart patterns that you trade and don't trade.

Entry Strategy: determines Strategy: determines the price at which you will enter your trade. For example, an entry order can be an order to buy if i f the market trades above a certain level. Learn how to read technical indicators and learn what an entry signal looks like to you, know what you will use as entry signals.

Open Position Strategy: Is Strategy: Is the most important and focuses on managing your emotions after you have entered the market. Too many open trades are harder to track and they put too much of your money at risk. When real money is involved your emotions change greatly which can effect your profitability as a trader.

If your emotions are not in check they may cause you to stop following your currency trading plan because fear or greed got the better of you. Stop Loss Strategy: A Strategy: A disciplined stop loss l oss strategy is critical to the preservation of profits and trading capital. Your currency trading plan must include a stop loss strategy for use on all trades. The stop loss price that you set is up to you. It depends on your risk ri sk profile, trading capital and financial goals as of how much you should set for a stop loss.

If your starting balance is small and you trade mini lots l ots you may need to set your stop loss l oss order far enough to make the trade workable. For this reason a higher percentage of risk may sometimes be acceptable. Profit Taking Strategy: Before Strategy: Before entering a trade you need to determine your profit taking level.

Good traders remain flexible with the profits they take. When a trade t rade moves in your favour you may have a strategy to lock in a profit that matches the amount of your trade at risk. You can then th en move the stop loss to the entry point while you continue to watch the profit run.

A llimit imit order can be placed at a price at which you will automatically sell if the trade goes your way. You will automatically collect your profits even if you are away from your account Discipline: Without Discipline: Without it a currency trading plan is useless. If you stick to your currency trading plan and you are not successful then your plan needs adjustment.

If you don't there is i s no way to tell if your currency trading plan is at fault, or if it i t was the decisions that you made outside of your plan. Exposure: You Exposure: You should always know what level of exposure you are comfortable with in i n the market. This will ensure that regardless of what happens to you, you will still have money left to trade with wi th even if you have made a number of consecutive losses.

After making the necessary changes to your currency trading plan you can still go back to the market. Money Management: Forex Management: Forex money management is very important as it focuses on how you protect and allocate your trading capital.

You need a strategy of limiting risk while making the most out of favorable market moves. Risk is the amount of pips you are willing to lose in any one trade and reward is the amount of pips you intend to gain in any one trade. Method Summary, Points To Ponder and One Hit Wonders To be tidied up - YOU do if you are reading this this - Learn basic PASR price action support resistance. This involves learning and understanding understanding exactly exactly what PASR is.

Support and Resistance is never calculated using random prices, SR is identified from PREVIOUS PRICE ACTION. Hunt these out and study them on thousands of charts. Once you have done this do the same on thousands more charts. At this point we have to learn the classical definitions of these candles and more importantly -where -where and how they must form to be considered significant.

Do this over and over and build buil d your confidence. As you do this you will learn more about how to PLAN YOUR TRADE and how to TRADE YOUR PLAN. Placing stop orders doesn't guarantee you won't get in on unconfirmed swings but it does better your chances. Learn how to recognise a bond candle, and better yet, a real, strong candle that seeks lower prices but finds buyers.

When you see the BOSS signaling an opportunity, start looking at the Worker for PASR to trade in the direction of the BOSS. I then switch this to Weekly to look l ook at the big b ig picture.

When I do my end of week analysis, I add a couple of cycle indicators but I'm not entirely convinced yet that they really tell me anything or are worth the effort. The most important parts for me are to be able to clearly see price bars or candles. The key is to know what Price Action IS and what it DOES at Support and Resistance.

For example, it would be foolish just to use Price Action without Support and Resistance. Next it would be foolish to use both of them without knowing where we are in the big bi g picture etc.

If we are wrong and price takes off in the other direction, then no big deal, we don't get filled and live to fight another day. If I entered an order anticipating a sell and then next day the sentiment changed or price action started to hint at buys then I pull the order immediately. It also depends where the price closed relative to support and resistance. Once the trade is entered, the trick is to TRADE THE PLAN.

If you are trading the Daily chart, then TRADE THE DAILY chart - forget about how many pips you are up or down, your plan takes care of that.

So many traders try to trade the Daily with a H4, H1, M15 or M5 mentality and then wonder why it doesn't work! This, along with the direction from the higher time frame s , guides us in our trades. Also we manage our trades once in a position. I only want the market to fill my order if it moves in my direction. It is not easy, but it i t is simple. Yes, those levels are further away now but so are the profits. It's all relative. The BOSS 20 and 50 does the same but from a Weekly point of view.

MA's are very powerful and I use them both in isolation and in combination with all my other stuff. They tell you the trend in two time frames, where prices are in relation to the trend, the strength of the trend, are invaluable as support and resistance AND especially when they are in confluence with support and resistance levels and can give us an idea when to expect the rubber band move to come into i nto play.

The cross of MA's, although never used as a trading signal due to the lag, is also very informative. MAs are dynamic whereas our support and resistance is static.

Nicola: The moving averages are great indicators of trend. If the 50 is i s above the 20 and the price is below them both then the trend is i s definitely down, and vice versa. Strat: You have the logic spot on but the description is upside down.

To make it more understandable, it would be better to say: If the 20 is below b elow the 50……….. The 20 is the boss of the th e When the price is stuck between them it i t is in a box and direction is not always clear. I see them as floating Dynamic? lines of support and resistance which can be just as powerful as the fixed lines of support and resistance I have drawn on my chart. Not sure if it is i s because a lot of traders use them but there is often price action of f the moving averages……..

Price is what we are concerned with and IT'S position relative rel ative to the 20 and 50 not the other way around. The 20 is the BOSS over the 50 - it is far more powerful - many times it acts as resistance and support - go back and look at lots l ots of charts. Always look at where price is relative to th the e If price iis s above the 20 it is i s bullish - it does not necessarily mean you should buy at that point but that you should be looking for other signs to tell t ell you to buy.

The more often price goes above the 20 whil while e it's direction is down, the greater the chance that it will wil l eventually put in a llow ow swing above it. Price is now boxed in in between the 20 and 50 telling telli ng us to sit tight ti ght until it shows us it's future direction. di rection. The 20 and 50 are also coming close closerr together and going horizontal - another sign that a big move can be expected from this.

Yes, they lag and yes they are indicators of price history hi story BUT we are not using them in any way shape or form to generate signals as you are probably more familiar with. wi th. I have some pretty good MA systems which are very profitable UNTIL they hit the dreaded consolidation and just like everything else in consolidation, in my opinion , are useless.

We also never use them in isolation. They are used as part of our total package in our decision making process. Either trade it and suffer the loss or reward, but mostly, stress, or stay out. If you stay out then forget it, let it i t go, don't look what happened.

What did happen is something over which we have no control so why waste energy worrying over it. For me, they have to be away from the noise of all the time frames below the Daily. When I place my stop loss, l oss, I EXPECT the MMs to run the stops and clean everyone out BUT I be lieve in my plan and let it run accordingly. A method is an all-embracing strategy. I do not care where it started, where it's been, how far it's gone or why it went there, only where it ended up.

I do not use highs and lows for any of my analysis - not even for trend lines. The close, in my opinion, is the most important level on a candle. I do not use tails or wicks for trend lines or any of my analysis. So, on a down trend line, I draw the li line ne through the open. Although the close is the most important, the other 3 levels also have their use in telling us what went on in that 24 hour bar. When that swing has produced it's retrace, rally or whatever the move, then move on to the next swing.

That is wh why y you will see us say 1. You do not have to get in at tops and bottoms on the Daily time frame. It's a toss-up between hanging in for a longer move or getting out with some profit.

It also depends where you are in the trend or not in a trend. From the trading psycho view, it is always best to grab some profits while you can and not l et a profit turn into nothing, or worse, a loser.

However if you do screw up and end up with nothing or a loser just take it on the chin and move on to the next trade. Its never gonna be any different d ifferent because market the is never the same twice.

This is i s what I do. I look in my crystal ball and I say entry is……there it will pause there, there and there. In a trending market ill give it more room. The combinations are endless and the outcome is always different. It does NOT, absolutely NOT, tell you of a possible direction change. What it tell tells s you is there are sellers closing their shorts profit taking and others coming in to sell and some to buy. I use it to confirm price action at support and resistance and to gauge the strength strengt h of a move.

I would never dream of trading on volume alone. Volume is also not as simple as a price bar in the sense that iincreasing ncreasing and decreasing volume indicates demand and supply so please be very careful using volume until we explain it in greater d detail.

This does not mean twice your MM allocation. It means divide your regular one trade into two trades t rades thereby halving the size on each. Place the 2 positions with the normal SL but set a TP Take Profit for the 1st position. A good TP is just under the ATR1 Average Trading Range of the pair being traded. When that PRICE is reached you have just taken profit.

It is in your account. No-one can take it back. So with 2 positions, you get a profit and a free trade if you manage it correctly. Pay special attention to position or location. These type of candles mean different things in different positions in a chart and sometimes mean nothing at all. Then, when you see what looks like a hammer or shooting star, remember Bond.

The amount of pips above the high will depend not only on the pair but on the current volatility of price action below the low on a shooting star. Look at what it is i s telling you. Then knowing that, move over to it's slave - the Daily and look at what that is telling you.

If you do this, do not draw other lines l ines in as you will end up with more horizontal lines than price bars! PS - I make them th em pretty faint dotted lines so as not to be distracting too. If there are very few reactions to it, then it iis s a low incidence line and may never come into play pl ay again. Always remember that with the markets, HISTORY repeats itself. It is only red because it closed below the open. Everything else other than colour is more important.

The greater the di difference fference the weaker the bar. And the close wants to be in the body of the bar……g bar……g - We must be very careful not to over-analyse and over-think - something for which I am also g guilty. I love nothing more but to look at charts and think through every possible scenario, but for what? Add a link to the page where you got the spreadsheet from, so that others might find it later. Go to Google Groups. Trading Plan is a pre-requisite to trading and it is one of the most important things for a trader.

The same thing applies whether you are day trading, scalping or swing trading. You need to have a proper plan or strategy in place before you can get into the market. What it does is that during times of high volatility, the investor can simply go and read the trade plan instead of panic selling on the unchecked emotion.

If you want to do the whole philosophical thing, there are some nice to haves to keep in your trading plans. The more knowledge you have about the markets before you take the plunge, the higher are your chances of success. That way, you will have a better understanding of the market and your trades. Trading plan is a pretty personal thing and as such should not be something that is written overnight. It might take weeks or months for you to develop a trading plan that fits your style.

It might even forever be a work in progress - market conditions change, your goals change, you know the drill. As such, it is better to start with a really simple Word or Excel trade plan template. Something that just has the absolute basics and a lot of space for personalisation. Trading Plan for Word via Google Docs : Get it here. You can fill it in once a quarter or once a year, depends on how fast you are moving on. Go to Google Doc. Trading Plan for Excel via Google Sheets : Get it here.

Second is a spreadsheet for planning your trades. This is handy for the weekends or whenever it is you are looking at the markets, assessing the moods and the fragilities against the value of your portfolio. Go to Google Sheet.

The following are some of the important points that you need to consider when developing your trading plan:.

A trading plan can be as simple or as complex as you want or need it to be. The main point of a trading plan is to keep you calm and relaxed during a trade, as all thinking should have been done prior to your entry — not during your trade. Professional traders are relaxed and composed when trading.

Amateurs are nervous before the trade and reckless during the trade. Keep your trading plan dynamic! It will add structure and organization to each trading session. It will be your ally when dealing with unexpected moves in the market, rather than making unjustified decisions when a trade does not go as expected. I recognize that Trading is one of the most challenging and rewarding professions on earth.

This will allow me to govern my own path and destiny without having to rely on anyone else for my well-being. Once I find consistency in this less frequent time-frame, I will seek to duplicate my success on the more frequent intraday time-frames. My focus will remain on the Equity markets, but I will look to duplicate successes in other market arenas when my time allows for greater trade frequency.

Daily setups only during my initial trading phase. All orders will be limit orders at the Ask price once a trade confirmation has been achieved. If my full share lot was not executed, I will seek to add liquidity by buying the remaining shares at the currently displayed bid price.

Final profits will be taken after a confirmation of the end of the current trend from chart of entry , unless ultimate target has been achieved first. I will not have more than 4R at risk at any one time. Log in to trading platform. Review index charts for short-term bias. Use my chosen finance website to review earnings reports, and then log into Trade Ideas scanner for new trade opportunities. Load potential trades into Long and Short watch lists.

Set alerts near entry points. Update TJS Journal. Take screenshots of closed trades and hyperlink to its corresponding trade journal entry. Review all open trades for possible next day action. Review any closed trades to determine whether plan was followed or not. Clean-up trading platform. Review the notes and screenshots of each trade days after closure and after all biases and emotions have subsided. Write notes in the journal sections of the TJS as to how future trade executions, management and exits can be improved.

Bi-weekly, check TJS Analysis sheet to see what sub-categories are producing positive expectancy with frequency. However, each of the following sections should be addressed in some form. Why am I trading: I recognize that Trading is one of the most challenging and rewarding professions on earth. To follow my trading plan without reservation. Above all else, I will be consistent! Yearly — To steadily increase my risk amount when my data tells me it is advisable to do so. To continue learning through my day-to-day activities of being in the market and through continued education.

To keep trading business expenses to a minimum. To see a steadily rising equity curve! Long Term — To trade for life! I would like to have multiple accounts; One for Income, via Day trading and one for Wealth, via Swing trading. This will allow me to eventually build up a retirement account where I can trade within a Roth K Plan. What Markets will I trade: My focus will remain on the Equity markets, but I will look to duplicate successes in other market arenas when my time allows for greater trade frequency.

What Timeframes will I trade: Daily setups only during my initial trading phase. Entry rules: All orders will be limit orders at the Ask price once a trade confirmation has been achieved.

Pre-market activities, or routine: Log in to trading platform. Post-market activities, or routine: Update TJS Journal. What Tools will I use for my trading business: Falcon Trading Computers — trading computer Super Trader Pro — charting platform Yahoo Finance, Trade Ideas — scanning software and opportunities Trading Journal Spreadsheet TJS Elite, for trade Analysis and Record-keeping Review process: Review the notes and screenshots of each trade days after closure and after all biases and emotions have subsided.

An Edge is nothing more than an indication of a higher probability of one thing happening over another. Every moment in the market is unique. I love taking small losses. I am not addicted to trading just to see what happens. I only trade high reward setups that have the probabilities in their favor. Be a bricklayer — make the same type of trades over and over again. Once I find a setup, I do not hesitate; once in a trade, I do not over analyze.

A detailed Trading Journal will be kept at all times, and I will act upon what it tells me. Everything I do will be for the success of my business!!! This is a living document. Click image to download this is a Microsoft Word template. For non-TJS users, please view the following promotional videos… Brought to you by, Trading Journal Spreadsheet, Corp.

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If needed, take a quick trading course to learn how the forex or the stock market works, read articles, books, financial sites, etc. Patience and Discipline IS the key. Forex Trading Plan[1]. Terms Privacy Policy Cookie Policy. A llimit imit order can be placed at a price at which you will automatically sell if the trade goes your way.

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