Simply put: There are internal and external factors that you need to consider when developing a trading strategy. Similarly, you don’t want to have a day trading strategy if your job requires you to run around all day. You don’t want to trade one-minute charts if you get nervous watching your account fluctuating. One of the key features of a successful forex strategy (we’ll get to that in a minute) is that it suits your personality and circumstances. Step 2: Perform a SWOT Analysis to Determine Your Ideal Trading Style If you’re done creating your SMART trading goal, you can proceed to step 2. You can save yourself a lot of time, money, and energy by making sure that what you’re pursuing is realistic. This is why irrational goals fall apart when they’re plugged into the SMART goal formula. It forces you to map out the process and support your ideas with facts. See how different this is from just saying that you want to make money? I expect that after one year of trading, I can consistently make an average of $500 per month. From then on, I can gradually proceed toward my goal. Then, as I became better at live trading, I expect to recoup my losses and get into break-even half a year after I started. Time-bound: I assume that during the first three months of trading, I’m going to lose money.Consequently, I feel that I am capable of reaching this goal. I have always been interested in the financial markets and have read several books on the topic. Relevant: I have been studying forex trading for over a year.Therefore, I’m convinced that my goal is realistic. Many traders have proven that this is possible without taking excessive risks. This means I need to produce an average monthly return of 2.5%. Attainable: I have a trading capital of $20,000.Measurable: I will build a trading strategy that produces an average return of $500 per month when backtested on five years of historical market data.Specific: I want to supplement my income with $500 per month trading forex.In a nutshell, you have to make sure that your goal is: This is the same process that companies like Apple use to define organizational objectives. The strategic management process is a six-step process that encompasses strategy planning, implementation, and evaluation. To make sure you don’t leave out any essential parts, it’s better to follow a systematic process.įor our tutorial, we’ll be building on the strategic management process. Needless to say, this is not the best approach.
The first option is that you simply take a piece of paper and start to note everything you find important. So, if you’re having trouble creating your forex trading plan, or if you want to tweak your existing plan, read on.
#HOW TO START FOREX TRADING STEP BY STEP HOW TO#
To help ease that uncertainty, we’ve created this guide that will show you, step by step, how to create a forex trading plan that leaves no stone unturned.Įven if your plan is already up and running, it never hurts to revise it – to make sure it’s as good as it could be. We all know how important it is to have a solid forex trading plan.
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