The difference between making money and losing money can be as simple as trading with a plan or trading without one.
A trading plan is an organized approach to executing a trading system that you’ve developed based on your market analysis and outlook while factoring in risk management and personal psychology.
No matter how good your trading plan is, it won’t work if you don’t follow it.
Forex traders who follow a disciplined approach are the ones who survive year after year after year.
They can even have more losing trades than winning ones and still be profitable because they follow a disciplined approach.
Here is a summary of what the key benefits are:
One last thing before you head off to your next class…
Always remember that the trading plan is a work in progress.
The market environment is not static. It’s dynamic and constantly changing. As things change, your trading plan must change, too.
Assess your trading plan and processes periodically, especially when you have changes in your financial or life situation.
Also, as your research leads to changes in your trading system or methods, be sure to reflect those adjustments in your forex trading plan.
Adapt and survive.
Remember, the main purpose of the trading plan is to keep you on task and to operate in an effective and efficient manner to make good trading decisions.
It is, however, only as good as you make it, and it is completely useless if it is not applied in practice.