Failed traders do not follow the rules: they either do not create, or do not stick by, a plan. Like with any successful business, there needs to be a clear focus, purpose, and direction.
You must create a business trading plan immediately to help with your trade accuracy.
In preparation of writing your plan of action, write down the answers to the following questions as descriptively as you can.
Section 1 can be filled out immediately while the other sections need to be filled out later in this course.
Introspection and self-awareness are vital: before you can acquire the mindset of a trader, you need to first understand yourself.
Trading Plan Questions:
a. Why do you want to learn how to trade?
b. What is the most important goal that you want to achieve during this course/trading?
c. How will you know when you have achieved that goal? What will the results be?
d. One year from now, what needs to have happened for you to feel comfortable with your progress?
e. How will your life change when you become a successful trader?
f. How will you prepare before each trading session (physically/mentally/analytically)?
2. Trading Rules
a. Rule for entering a trade? Which Setups? Which Instrument? What time of day?
b. Rule for exiting a trade at your target?
c. Rule for taking partial profit?
d. Rule for where to place your stop loss?
e. Rule for risk to reward ratio’s?
f. Rule for position sizing and % risk?
g. Rule for max risk per day?
h. Rule for removing money from account?
i. Rule for watching the economic announcements?
a. Where and how often will you read this plan of action?
b. Rule for when one of the above rules is broken?
c. How often will you fill out your log book and create your own trading stats?
d. How often will you dedicate your time into reading and learning the markets?
e. How will you deal with a losing streak?
Rule Based Forex Trading System
This course was designed not only to teach you to be a trader, but also to define your overall major purpose as a trader, and to become fully aware to all facets of trading.
Mindset and purpose are only part of the equation in becoming a successful trader. You need to develop a system that works for you so that you can pull money out of the markets.
A rule-based system where all the rules for entering and exiting trades are completely and transparently laid out is what you need as part of your plan of action. That means: rules to enter a trade, rules for finding your targets, rules for placing your stops, rules for taking profits (partial or full), rules for adjusting your stop-marks to neutralize risk, rules for how much to risk…in essence, rules for everything.
Having a rule-based system helps to eliminate a lot of the emotions involved with trading.
The discipline section is meant to keep your mindset and your rules in check and to maintain the consistency that one needs to become a successful trader.
Go ahead and now fill out section 1 of your plan of action.