In our activities in the forex market trading, trading plan (trading plan) is a systematic approach that governs all aspects of trading. Broadly speaking, trading in the forex market is composed of 3 systems that work simultaneously and are the main pillars, namely trading systems that include methods and strategies used (forex trading system), the system of money management and control systems and the regulation of emotion (emotion management system). This approach often encountered in their trading plan that has been experienced. Each system has a provision that we agreed upon earlier (rule set) to set the object to support our trading. The relationship between the three pillars are like the following diagram:
Each object is a checklist that will determine the overall trading process, namely:
Forex trading system - determining the right time for entry and exit, the appropriate analysis and trading strategy based on the method we use.
Money management system - determine the amount of risk per trade and position size according to the balance in our trading account.
Emotion management system - ensuring our emotional state at the moment, whether we are emotionally stable and are not eligible to open a trading position. If our emotions are unstable feared will have an impact on when we make a decision. Checklist of emotion is necessary if we are trading entirely manually. If we use a trading software that automatically gives entry signals and exit the emotion checklist can be ignored.
Level entry and exit we've done in detail is recorded in history or record a history of trading (trading logs) to be evaluated later. Short-term evaluation should be done immediately after a trade is completed (entry and exit at one position) in order to be repaired or add new ideas if necessary. Depending on the tastes and needs, trading logs can be directly considered as the benchmark for trading journal or create a trading journal in order to evaluate the long-term. Trading logs can be used as a measure of the extent to which the overall trading system we are working on a particular market conditions.
Checklist for entry level and exit level should only be at one price and not followed by a second choice (ambiguous). Only if the trading signals we consider to be valid and meet all the conditions that we agree, then we will entry or exit. If there could be two options are equally valid, should be taken that the probability is greater.
For a checklist on the money management system, we determined the percentage of risk that should be quite realistic and in accordance with the conditions of our balance at that time. This of course is subject to change in accordance with changes in balance and the probability that we get a trading signal. In addition, here we can also add notes risk / reward ratio of each trade on this checklist system.
Checklist on emotion management system is needed in order to record the history of our emotions during trading. It can be mean when we read the log trading after several trade. By always evaluating emotional state while trading, in the long run will be able to achieve emotional stability. Example checklist of emotions: 'whether I would be upset if I hit the stop loss?' If 'yes', then we add a note as a warning, for example: 'experienced loss is an integral part of the journey to success in forex trading.'
Forex trading is a business then trading plan is also a business plan that should really prepare us before we plunge into a live account with real money. The better and mature our preparation, the greater hope for success in the live account. If it has not really solid with a trading plan, we can do a trial run on a demo account until we are accustomed to using the three pillars in the trading plan.
