Making a forex trading plan is a very important thing to do for someone who decides to start trading forex. With a good plan, you can profit much from trading. That’s why today we want to give you some steps to notice when you make a forex trading strategy.
The first thing before going into specific first plans we want you to look for a piece of paper to write down your forex trading plan. It really helps you a lot in observing and consult as needed. Many investors once believed that they could plan and remember it in their heads, but when it did, it didn't look like they had planned and the results of the transactions would become worse. So we recommend that you write down your plan on a piece of paper or type and then photocopy it so you can refer to it anytime, anywhere.
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Here are some steps of the process of making a forex trading plan.
Not all trading strategies will work on all currency pairs, so you should double check which of your forex strategies work best.
You should start with a specific currency pair. Develop an investment strategy for that currency pair and can also devise a strategy for many different currency pairs. However, we recommend that if you are a new investor or small business, you should only monitor and invest in 1 or 2 of your favorite currency pairs to avoid losing control of management and trading.
In MT4 software, there are many types of technical indicators to help investors analyze and forecast market trends. Investors can choose the appropriate indicator for each specific investment strategy. New investors can use indicators like: MACD, Bollinger Bands, RSI because it is quite easy to use and effective for analysis.
Try using different types of indicators and assess yourself whether it is effective or appropriate. However, we have the advice that indicators are just a tool to help not rely too much on it.
In Forex trading, specifically in MT4 time frame software for traders to analyze the market is divided into 9 main frames: M1, M5, M15, M30, H1, H4, D1, W1, MN .
If you are a small trend investor, you can use small time frames from Frame M1 to H4. For successful investors, they often use large time frames from D1 to MN to analyze market trends most clearly.
So try to learn how to analyze the use of large time frames in your own investment plans but also stop ignoring other time frames because each time frame has its own benefits. Each forex trading strategy requires a different time frame. For example, scalping strategy works in shorter time than swing trading strategy.
Determining the signal input is extremely important in Forex trading. The more you determine the correct entry signal, the more successful your trading result will be. You can determine the entry signal by the following rules:
If it's too hard to write down, you can describe the entry signal using the illustration in your trading plan.
Stop loss points will help you limit the amount of losses that you will incur in trades. So specify the details of your stop loss for each trade, whether it is a certain number of pips or where it is compared to the entry point. Usually the stop loss can be determined through the Lose 1 Profit 2 rule, which means that if you determine the profit you can make of $10, you must leave the stop loss at $5.
Profit is certainly something that any investor would like. Write down as much detail as possible your desired profit position for each transaction. Traders can determine their expected profit through chart analysis of market trends. And always follow the 1 Lose 2 Loss procedure to optimize the amount of profit you can receive.
You should always note that do not be too greedy if there is no solid basis, because the Forex market is a market that is always volatile and you can eat a lot but can lose a lot.
Surely you will always be wondering one thing when to stop in transactions or when you should exit the order, withdraw all money while trading? There are many ways for investors to determine when to stop trading. They often use the following methods to determine a suitable time to stop trading.